Here is a look at AI, massive layoffs and the coming stock market crash.
November 4 (King World News) – Gerald Celente: The tech industry is flying high on artificial intelligence (AI). The new technology accounted for 1.1 percentage points of U.S. economic growth in the third quarter. It drives stock prices to new highs almost weekly and has created trillions of dollars of paper wealth for households and professional investors.
Eight companies deeply involved in AI each have market valuations of $1 trillion or more.
The Standard & Poor’s 500 stock index has grown by 15 percent this year, with 37 percent of that growth due to just seven companies that are leading the charge into an AI future. Other sectors in the exchange are up a far more modest 5 percent.
In contrast to the AI economy, one in every four small businesses responding to a September Keybank survey reported being in “survival mode.” Small businesses make up about 40 percent of U.S. economic activity.
The U.S. economy has added a net 205,000 jobs this year through September, 58 percent fewer than the same period last year, according to outplacement firm Challenger, Gray & Christmas. Seasonal hiring for the holidays will be the smallest since 2009 during the Great Recession, the company said.
Target announced last week it will dump 1,800 workers, marking its first layoff in a decade. Starbucks has cut 2,000 employees this year. Tech and financial companies also are shedding workers, saying that AI can do the same jobs…
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Meanwhile, Norton’s, a 104-year-old Alabama flower shop, is counting its stems.
“If a bouquet has 25 stems [and] you reduce that by three or four stems, you’re able to keep the price the same,” owner Cameron Pappas explained to CNBC. “We’ve just got an eagle eye on all our costs.”
“Pappas’ story and many like it are being masked in the macro data by the power of AI,” CNBC noted.
While AI companies are spending hundreds of billions of dollars to build data centers as big as 10 football fields, spending by U.S. manufacturers has contracted for seven consecutive months, the Institute for Supply Management reported.
Construction has been flat or trending down because of rising costs for labor and for materials that now carry the additional cost of tariffs. The sector’s costs will rise another 4.6 percent in this quarter because of tariffs, the institute noted.
TREND FORECAST:
As reported by a Harvard poll this year. Some 40 percent of Americans under the age of 30 say they are “barely getting by,” while just 16 percent said they were doing OK or very well. Showing the pain ahead, with housing prices having increased some 50 percent over the past five years, just 50 percent believed they would have enough money to buy a home or have a child in the future.
Breathless headlines about AI’s dazzling future and swelling stock market wealth are hiding fundamental truths about the U.S. economy—that there is widespread weakness because consumers are cutting spending, that affordability is worsening, and that there are few signs of hope for a middle-class revival.
The weakness in consumer spending will ripple through to businesses. That will separate the two economies even more as AI-driven investment flies higher on dreams of a future payoff and the “real” economy slows further.
The odds are increasing that the stock market will crash as AI-related market valuations come to be seen as increasingly unrealistic. When that reaches a tipping point, key players will take profits and wait for the crash to buy back in.
As we have long noted, the pain on Main Street does not become a reality in the mainstream media until Wall Street crashes. And this time when the equity markets in the U.S. crash, it will be a crash heard around the world.
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