American companies are approaching what one top economist is calling a “Cortés moment” on artificial intelligence—a point of irreversible commitment that could reshape the U.S. labor market in ways not yet visible in the data, but coming fast.
Zandi acknowledged the possibility that AI could be serving as a convenient cover story. “Of course, AI could be a smoke screen for other, less flattering reasons for the cuts,” he wrote, “but I suspect not.” And even if it were, he argued, the effect on the broader labor market may be the same, referring to Block’s stock surge following the announcement.
“Even so, it may not matter for the job market,” Zandi wrote, “as the jump in Block’s stock price signals to other companies that they will be rewarded if they follow suit.”
That dynamic—when one firm’s AI-driven restructuring is applauded by Wall Street, prompting peers to imitate it—is precisely the mechanism Zandi fears most. It’s not a single dramatic rupture, but a cascading series of rational corporate decisions, each one nudging the labor market closer to the edge.
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. That, in Zandi’s framing, is 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.
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.
