U.S. businesses are getting close to what a leading economist terms a “Cortés moment” regarding artificial intelligence—an irreversible point of commitment that might transform the American labor market in ways not yet seen in data but unfolding rapidly.
Mark Zandi, chief economist at Moody’s Analytics, referenced Spanish conquistador Hernán Cortés—who burned his boats upon arriving in Mexico in 1519, eliminating any chance of retreat—to describe the stance he believes corporate America is subtly taking toward AI adoption. Companies are investing heavily, making structural bets, and cutting off their own escape routes. Whether this leads to success or disaster, Zandi suggests, may depend on timing. This analogy became clear to Zandi after a fintech company announced it was slashing its workforce by 40%.
“Companies seem to be nearing a Cortés moment with artificial intelligence,” Zandi . “That’s my takeaway from fintech firm Block’s decision to cut its workforce by 40%. While Block didn’t explicitly link the cuts to AI, it effectively did.”
Zandi acknowledged the possibility that AI could be acting as a convenient cover story. “Of course, AI might be a smokescreen for other, less favorable reasons behind the cuts,” he wrote, “but I don’t think that’s the case.” Even if it were, he argued, the impact on the broader labor market would likely be the same—pointing to Block’s stock surge following the announcement.
“Even so, it may not matter for the job market,” Zandi wrote, “as Block’s stock price jump signals to other companies that they’ll be rewarded if they follow suit.”
This dynamic—where one firm’s AI-driven restructuring is praised by Wall Street, prompting peers to imitate it—is exactly the mechanism Zandi fears most. It’s not a single dramatic break, but a cascading series of rational corporate decisions, each nudging the labor market closer to the edge.
“Right now, we’re not creating any jobs, and there are no AI productivity gains,” Zandi at a recent virtual event on AI and the economy featuring economists from Goldman Sachs and Yale. “What happens when we do see productivity gains here? Won’t that mean job loss?”
His concern is a familiar one but with new urgency. For years, economists have debated —a discussion that’s mostly played out in conference rooms and research papers while macro data remained stubbornly stable. But Zandi argues this stability is masking a slow-motion transformation. The impact of AI is starting to “kick in” across the economy, he told in February, and it’s already most visible in one area: hiring.
Tech jobs are declining. Overall hiring rates are weak. And recently hit their highest level since 2009—though Zandi clarifies AI’s weighing effect on the job market “is due to weaker hiring, not layoffs.” Meanwhile, the National Bureau of Economic Research that over 80% of firms in recent surveys say AI had no impact on employment or productivity over the past three years—yet those same firms forecast AI will boost productivity by 1.4% over the next three years. This disconnect between falling hiring numbers and rising productivity expectations is precisely what worries Zandi and why he sees this as a watershed Cortés moment.
When productivity gains do arrive, companies won’t ease into them. They’ll act on them at scale—like Block, cutting headcount, consolidating workflows, and deploying AI agents across functions that once required entire teams. In Zandi’s framing, that’s the Cortés moment: not when companies start investing in AI, but when they commit to it so fully that reverting to the old model becomes unthinkable.
The financial infrastructure for this commitment is already in place. The —a record high that many are Big Tech took on during the late 1990s dotcom boom. Unlike that era, when the Y2K bubble’s collapse was largely absorbed by equity investors, today’s AI buildout is financed with debt, meaning a market correction would ripple well beyond stock portfolios.
In a Moody’s , Zandi laid out four possible futures for the AI economy in 2026: a smooth AI-powered productivity-led expansion (40% probability), a job upheaval where adoption outpaces labor market adjustment (20%), a scenario where AI falls flat and triggers a correction (25%), and a 1990s-style productivity boom (15%). The most likely outcome, he believes, is navigable, but none are cost-free.
The labor market, for now, has one remaining buffer: health care, which has been the economy’s primary job-creation engine. “Without health care,” Zandi , “the economy would be losing lots of jobs.”
Cortés won his gamble. His troops, with no ships to sail home on, had no choice but to fight forward. Corporate America, Zandi implies, may soon find itself in the same position—committed not by decree, but by the sheer weight of investment, debt, and competitive pressure. The boats, in other words, are already smoldering.