Markets may be entering a ‘lost decade,’ a scenario that seems paradoxical given current equity valuations near record highs and enthusiasm surrounding artificial intelligence fueling growth narratives. But, the most relevant signal isn’t coming from tech stock charts, but from the labor market.
While stock listings continue to reflect solid earnings and ambitious expectations, a growing divergence is emerging between financial price trajectories and the dynamics of the real economy. Historically, it is during these periods of misalignment that the groundwork is laid for extended periods of modest returns. This doesn’t necessarily mean sudden crashes, but rather years characterized by volatility, sideways movement, and contained real performance. The potential for prolonged stagnation is raising concerns among investors who have grown accustomed to robust gains.
The signal coming from employment
The disconnect between financial markets and the real economy is becoming increasingly apparent, and the labor market is sending a particularly concerning signal. According to Antonio Santoro, director of Mia Academy, they have created the “Ia shock index,” a proprietary index that measures the impact of artificial intelligence on the Italian labor market.
Santoro explained that professions most at risk of disappearing are those involving tasks with limited complex social interaction and those with replicable duties easily handled by machines. “The professions that tend to disappear are those that do jobs with scarce complex social relationships and that provide tasks reliably replicable to machines,” he said. This suggests a potential shift in the types of jobs available and the skills required to succeed in the future.
Despite these concerns, Santoro advocates for a positive outlook on AI, viewing it not as a job destroyer but as a tool to liberate humans from routine tasks. “We must gaze at AI in a positive way, not as a loss of jobs but as a possibility to free man who can thus dedicate himself to tasks superior to those of machines and to typically human activities,” he stated. This perspective highlights the potential for AI to augment human capabilities and create new opportunities, but too underscores the need for workforce adaptation and reskilling initiatives.
Recent studies further support the idea that AI is reshaping the job landscape. A working paper from INAPP analyzes the impact of AI on the Italian labor market, estimating the exposure of various professions and sectors to both the risk of substitution and the potential for complementarity. Research from the OECD highlights the growing use of algorithmic management – the application of AI to automate managerial tasks – and the need for regulatory intervention to ensure responsible implementation. The World Economic Forum’s “Future of Job Report” provides a comprehensive overview of the rapidly evolving global employment landscape.
These developments come as Wall Street grapples with anxieties over potential mass unemployment driven by AI. A report by Citrini Research outlined a scenario of widespread job losses among white-collar workers by 2028, contributing to market turbulence. The report suggests that the increasing capabilities of AI could devalue human intelligence, leading to a decline in demand for intellectual labor.
