The rapid rise of artificial intelligence may supercharge the economic growth of the U.S., but Jefferies’ chief market strategist David Zervos says it could also trigger a wave of job losses that the Federal Reserve is unprepared to handle.
Fed Faces AI Dilemma: Strong Growth But Rising Unemployment
Speaking on CNBC’s Fast Money this week, Zervos warned that the Fed’s traditional focus on inflation could blind it to the risks AI poses to employment.
“We could actually have a pretty strong growth economy. Your AI story… [is] something really pretty spectacular. But the job growth side of it is not nearly as comfortable as you would like it to be,” he said.
Zervos, a longtime market bull and potential candidate to succeed Fed Chair Jerome Powell, painted a troubling scenario.
“Imagine a world, maybe where we’re [the economy] growing at three and a half or four [percent.] Things are really good, but the unemployment rate keeps ticking up,” he noted.
AI Job Loss Predictions Raise Alarm Among Wall Street Strategists
He also cited private conversations with top technology leaders.
“The smartest AI guys I know… they’ve been saying for a while [that] we’re going to lose three to five million jobs in the next three to four years. Maybe even faster.”
See Also: Nearly 1 Million Jobs Disappeared—And No One Noticed Until Now
AI Job Loss Concerns Spread From Wall Street To Classrooms And Tech Giants
In July, ARK Invest CEO Cathie Wood warned of mounting job market pressures for recent college graduates as AI disrupted entry-level roles.
She pointed to rising unemployment among new grads, which climbed from 4% to more than 6%, and urged job seekers to focus on upskilling in AI.
By August, Goldman Sachs Group Inc. highlighted AI’s toll on young tech workers, noting the sector’s share of U.S. employment had fallen since late 2022.
Unemployment among 20- to 30-year-olds in tech rose nearly 3 percentage points since early 2024—over four times the increase in the overall jobless rate.
At the same time, public concern deepened. A Reuters/Ipsos poll found 71% of Americans feared AI would eliminate too many jobs permanently, while 77% worried it could fuel political instability. Nearly half opposed the U.S. military use of AI to identify attack targets.
Earlier this month, AI pioneer Geoffrey Hinton also sounded the alarm, warning that AI would fuel mass unemployment while boosting corporate profits.
He argued the capitalist system, not AI itself, would enrich a few and impoverish many. Hinton also dismissed universal basic income as insufficient and criticized the U.S. for weak regulation compared to China.
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