CoinTelegraph • October 5th 2026, 12:30 PM
Too big to pause: Could an AI slowdown crash the economy?
Key Summary
The AI industry is at a crossroads, with top leaders calling for a slowdown in development to prioritize safety research, while US President Donald Trump pushes for rapid advancement to beat China. An AI slowdown could impact the US economy, potentially leading to market corrections, reduced investment, and a recession.
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Market Impact
- An AI slowdown could lead to market corrections, reduced investment, and a recession, as seen in a scenario released by major credit rating agency Fitch, expecting a 35% equity shock plus capex retrenchment.
- A slowdown could also trigger a pullback in investment, eroding household wealth and weighing down on consumption and further investment.
What's Next
- The next high-profile AI safety incident could renew the push toward a slowdown.
- Global anxiety around the technology is growing, and the pace of AI investment is expected to continue growing, with the five major US-based AI hyperscalers expected to tip $800 billion into the AI buildout this year.
- The IMF warned in January that weaker AI-productivity expectations could see reduced investment, trigger a market correction and erode household wealth.
- Bank for International Settlements (BIS) administrator Pablo Hernández de Cos stated that a pullback in investment could turn today's capital expenditure boom into a bust.