Post by Dr. Jeffrey Funk

The daily use of generative AI for work and non-work is not rising while the percentage that use it infrequently continues to rise. Daily usage is “remaining unexpectedly stable and currently present little evidence of any imminent displacement risk” for work. Furthermore, job posting data shows that “demand for software engineers is actually rising rapidly, up 11% year-over-year in early 2026.” For all jobs posted on the job hiring site Indeed, the demand is down by about 5% over the same time period. Apparently, the AI boom has increased the demand for software engineers relative to other jobs, perhaps because the AI investment boom - in hiring by AI startups, incumbent companies, or data center companies - has increased the demand for software engineers. These data should be considered within the context of the overall narrative about AI dramatically increasing America’s productivity, which is behind the overall increase in the market capitalization of AI-related companies by $35 trillion (from Economist) over the last 3.5 years (a bit lower over the last few months). The hype about this narrative has increased dramatically over the last month. First, there was Matt Shumer’s post on X about AI displacing not only software engineers, but also most professions in fields such as “law, finance, medicine, accounting, consulting, writing, design, analysis, customer service.” Second, a more recent viral essay by Citrini Research paints a catastrophic picture of an economy destroyed by #AI,” putting almost everyone out of work. The piece “describes a world in which the S&P 500 has plummeted 38%, unemployment has spiked to 10.2%, and the U.S. economy is trapped in a deflationary spiral caused by the mass displacement of white-collar workers.” The facts presented in this post don’t support that narrative. The daily usage of AI is not rising and demand for software engineers is not collapsing. The article containing the data presented above for AI usage and software engineering demand also presents a critique of the essay by Citadel. It says: “Displacing white collar work would require orders of magnitude more compute intensity than the current level utilization. If automation were to expand at the breakneck pace Citrini fears, the demand for compute would inherently rise, pushing up its marginal cost. If the marginal cost of compute rises above the marginal cost of human labor for certain tasks, substitution will not occur, creating a natural economic boundary”. I would throw in concerns about the frequency of hallucinations and no profits for AI software companies because they have priced their software lower than costs. generative AI will continue to diffuse but at a slow pace and the current AI bubble will pop. #technology #innovation #artificialintelligence #hype