Why a Crack in the AI Boom Could Trigger a Recession

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Dec 14, 2025

Ajay Rajadhyaksha, global chairman of research at Barclays, dives deep into the evolving relationship between AI and the economy. He clarifies that AI is slowing new hiring and pressuring wages, rather than causing job losses. Rajadhyaksha highlights that substantial AI investments are fueling economic growth, but warns that a decline in such spending could trigger a recession. He also points to Japan and Korea as promising markets for AI opportunities, shedding light on the contrasting fates of private startups and established tech firms.

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INSIGHT

Fed Cut Was Data-Dependent

The Fed's quarter-point cut left the door open for further easing in 2026, shifting markets back onto data dependence.
Telis Demos and Hannah Erin Lang note Powell signaled inflation could return to ~2% if tariff effects abate, making future cuts possible.

ADVICE

Make CPI A Portfolio Catalyst

Watch the upcoming CPI report closely because a hotter reading would pressure consumer stocks.
Investors should consider inflation and tariff rulings when sizing positions in names like Nike and General Mills.

INSIGHT

Global Rate Divergence Moves Capital

Divergent central-bank moves, especially a hawkish Bank of Japan, could pull capital into JGBs and out of U.S. Treasuries.
That flow would influence dollar strength and could reshape global allocations away from U.S. stocks.

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In this week's episode of WSJ’s Take On the Week, co-host Telis Demos and guest host Hannah Erin Lang discuss the Federal Reserve's recent rate cut and whether further easing is expected in 2026. They get into the upcoming CPI report, which is expected to show stubborn inflation, and how that could pressure consumer stocks like Nike and General Mills. The hosts also look at the busy slate of global central bank decisions from the EU, the U.K., and Japan — highlighting how a potential rate hike from the Bank of Japan could impact the U.S. dollar. They also discuss whether the latest jobs report reveals the growing impact of artificial intelligence on the labor market?

After the break, Telis is joined by Ajay Rajadhyaksha, global chairman of research at Barclays, to explore the relationship between AI and the economy. Rajadhyaksha explains why he doesn’t see AI causing net job losses yet, but rather a slowdown in new hiring and wage pressure. He argues that the huge amount of AI spending is keeping the economy growing right now. However, he warns that if the AI investment falters, there could be consequences for the U.S. economy. Finally, Ajay offers his take on why investors should look to markets like Japan and Korea for AI opportunities.

This is WSJ’s Take On the Week where co-hosts Gunjan Banerji, lead writer for Live Markets, and Telis Demos, Heard on the Street’s banking and money columnist, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead.

Have an idea for a future guest or episode? How can we better help you take on the week? We’d love to hear from you. Email the show at takeontheweek@wsj.com.

To watch the video version of this episode, visit our WSJ Podcasts YouTube channel or the video page of WSJ.com