The credit rating agency Egan-Jones has issued a dire warning: the economy is teetering on the edge of collapse, largely due to the rapid rise of artificial intelligence. In a bluntly titled commentary, “It’s Over,” Egan-Jones asserts, “AI has advanced so far that the complete disruption of the economy is all but certain.” This perspective highlights that firms providing expertise by the hour, including senior talent, will be the first victims of this upheaval.
Their analysis suggests that we should brace for compressed margins in professional services as AI begins to disrupt traditional economic frameworks. They also foresee lower returns for venture capital investments and short-term pressure on home prices as screen-based jobs face upheaval. This has raised significant concerns among industry experts, who worry that AI automation could potentially dismantle entire industries and eliminate whole categories of jobs.
The urgency of Egan-Jones’s warning stems partly from their observation that “the capabilities of the latest models appear to have surpassed a threshold of quality in their output and speed for widespread adoption.” This new reality indicates that companies will increasingly turn to AI to enhance their operations. Egan-Jones envisions a future where some businesses may thrive with few, if any, human employees. Startups that adopt AI can scale with less investment, creating a scenario where traditional capital becomes less crucial for success. The outcome? A subtle deflation in the value of money, where venture firms lose leverage and see their returns shrink.
This shift will not spare consulting firms and other professional services. Egan-Jones notes that advice can now come from AI chatbots, reducing the need for human consultants. Some firms have already begun laying off staff in anticipation of these changes, and this trend is likely to persist as the industry evolves.
It’s essential to recognize that Egan-Jones is considered a minor credit agency, which means its forecasts don’t hold the same weight as those from the larger three credit agencies. Many economists caution that the current landscape of AI-related job loss is still murky and may even be overstated. Employers often find it convenient to attribute headcount reductions, usually driven by financial motives, to AI technologies.
