External signal·Stanford HAI·12 min read
2026 AI Index Report: Economy
“AI's labor market effects are showing up unevenly, concentrated in hiring pipelines and the youngest workers in exposed occupations.”
Summary
The economy chapter of Stanford HAI's 2026 AI Index is the field's neutral baseline. Global corporate AI investment more than doubled in 2025 — private investment up 127.5%, with generative AI capturing nearly half of all private AI funding and the US committing 23x more than China. Organizational adoption rose to 88% of surveyed organizations (generative AI used in at least one business function at 70%), though AI agent deployment remains in the single digits across nearly all functions. On labor, the effects are uneven and concentrated in hiring pipelines and the youngest workers in exposed occupations: employment for software developers aged 22-25 has fallen nearly 20% from 2024, and one-third of organizations expect AI to reduce their workforce within a year — even as large-scale job losses have not yet appeared in overall employment data. Documented productivity gains run from 14-15% in customer support to 26% in software development and 73% in marketing output, largest in structured, measurable work, with an emerging caution that heavy AI reliance may carry long-term learning penalties.
Predictions for the future of work
The report forecasts cautiously through employer expectations rather than its own projection: anticipated workforce reductions are highest in service operations, supply chain, and software engineering, and across nearly all functions expected cuts outpace those already observed — framing the labor signal as a near-term leading indicator concentrated on entry pipelines and the youngest exposed workers. It also flags a possible long-run learning penalty from AI over-reliance, a skills risk for the next cohort even where headline employment holds up.
Originally published by Stanford HAI
Read the original at Stanford HAI