DeepMind economist sees no AI job bloodbath yet, warns of layoff cascade

Alex Imas, director of AGI economics at Google DeepMind, said he has not seen evidence that artificial intelligence is causing job losses. In an interview with the "Dwarkesh Podcast," Imas warned that a wave of layoffs could still emerge from companies restructuring around AI.

Imas argued that the immediate risk is not AI directly replacing workers. The danger, he said, is that firms preemptively cut headcount to signal they are adapting to the technology. That could trigger a cascade. One company's layoffs force peers to follow suit, even if the underlying productivity gains have not materialized.

The cascade begins when a prominent firm announces AI-driven layoffs, Imas explained. Others follow to avoid being seen as lagging behind on technology adoption. The result is a wave of job cuts that exceeds what the technology actually requires. He said the pattern has played out in earlier technology transitions, where companies overestimated the speed of change.

Imas's argument suggests the near-term disruption to labor markets may be smaller than feared. The medium-term risk of a self-fulfilling downturn in hiring is real. AI stocks have rallied this year as investors bet on efficiency gains. That optimism may be premature if the restructuring wave slows economic activity, Imas said.

The US labor market remains tight, with unemployment near historic lows and wage growth steady. A layoff cascade would reverse those trends quickly, Imas said. The impact could be concentrated in white-collar roles where AI tools are most applicable.

For Apple (AAPL), a broad layoff scenario would hit consumer spending. The company's revenue from hardware and services depends on household budgets. A downturn in hiring could reduce demand for iPhones, Macs, and services like AppleCare. Corporate cost-cutting could slow data-center buildouts, which would weigh on NVIDIA. Neither scenario is priced in, Imas suggested, because investors are focused on the technology's potential, not the messy transition.

NVIDIA's revenue is tied to data-center investment by large technology companies. If those companies cut headcount, they may also delay infrastructure spending. The stock has risen sharply on AI demand expectations. Imas's warning introduces uncertainty into that outlook. He said the risk is that companies slow investment while still announcing AI initiatives to reassure shareholders.

Imas warned that a broad layoff scenario would hit consumer discretionary companies beyond Apple. Retailers, restaurants, and travel companies could see weaker demand if job losses mount. The impact would vary by sector, he said, with higher-end spending less affected than mid-market.

Imas said the cascade could happen quickly if several large companies act at once. He cited the tech sector's history of copycat behavior. The risk is highest in sectors where AI adoption is most visible, such as software, media, and professional services.

Imas said the market's focus on AI's upside may overlook the risk of a restructuring-driven downturn. He said investors should watch corporate earnings calls for language about AI-related headcount changes. Those signals may appear before official announcements.

The debate over AI and employment is shifting from theory to policy. The White House has commissioned studies on AI's labor impact. Central banks are watching wage data for signs of structural change. Imas offered a counterpoint to the prevailing optimism. He said policymakers should prepare for a scenario where layoffs accelerate faster than the technology justifies.

The podcast episode was released this week. Imas did not offer a timeline for the potential cascade. He said the key signal to watch is whether companies start announcing AI-driven restructuring plans that include headcount reductions, not just hiring freezes.