Goldman Sachs Warns: AI Layoffs Could Surge in Recession

Goldman Sachs, one of the world’s largest investment banks, has issued a stark warning: if the U.S. enters a recession, companies are likely to accelerate layoffs by replacing workers with artificial intelligence. This isn’t just a theoretical risk for tech workers or office staff—according to the bank’s analysis, millions of jobs across retail, customer service, manufacturing, and even some white-collar roles could be on the line. For everyday people, this means that an economic downturn could bring not only the usual worries about job cuts, but also a new wave of automation that makes finding work even harder.

What Happened

On October 22, 2026, Yahoo Finance reported on a new analysis from Goldman Sachs. The bank’s economists say that if the U.S. economy slips into recession, companies will likely use the opportunity to cut costs by automating more jobs with AI. This is a shift from previous downturns, where layoffs were often temporary and workers could expect to be rehired as the economy recovered. Now, Goldman Sachs warns, many of these jobs may never come back.

Goldman Sachs has been tracking the impact of AI on the labor market for years. In a 2023 report, the bank estimated that up to 300 million full-time jobs worldwide could be affected by automation in the coming decades. But the new warning is more immediate: a recession could serve as a catalyst, pushing companies to adopt AI faster than ever before. The bank points to recent advances in generative AI—like OpenAI’s GPT-4 and Google’s Gemini—that can handle everything from customer service chats to basic legal work. With these tools now widely available, the temptation for companies to replace human workers is higher than ever, especially when profits are under pressure.

How This Affects Everyday People

For workers, the implications are clear and troubling. If a recession hits, jobs that have long felt safe—like call center agents, retail clerks, and even some teachers and healthcare workers—could be among the first to go. According to a 2024 study from the International Labour Organization, nearly 40% of jobs in customer service and administrative support are now considered at high risk of automation. And unlike past layoffs, these jobs may not return once the economy recovers, because AI systems can do the work for less money and with fewer mistakes.

Families could feel the impact in other ways. Parents might see after-school jobs for teens disappear as grocery stores and fast food chains roll out more self-checkouts and automated kitchens. Students graduating from college could face a tougher job market, with entry-level positions in marketing, journalism, and finance increasingly handled by AI. Even teachers and tutors are feeling the squeeze, as some school districts experiment with AI-driven lesson planning and grading tools.

For those already living paycheck to paycheck, the risk is especially acute. Losing a job in a recession is hard enough, but being replaced by a machine makes it even harder to find something new. The AI layoffs tracker shows that in 2025 alone, more than 120,000 U.S. workers lost jobs to automation—a number that could spike if the economy takes a turn for the worse.

The Bigger Picture

This warning from Goldman Sachs is part of a larger trend: as AI gets smarter and cheaper, companies are using it to cut costs wherever they can. In the past two years, major firms like IBM, Walmart, and McDonald’s have all announced plans to automate thousands of roles. IBM’s CEO said in 2023 that the company would pause hiring for jobs that could be replaced by AI, affecting up to 7,800 positions. Meanwhile, McDonald’s has been rolling out AI-powered drive-thru systems, and Walmart is testing robot stockers in hundreds of stores.

Regulators are starting to take notice. The European Union passed the AI Act in 2024, which sets strict rules for how companies can use AI in hiring and layoffs. But in the U.S., there’s no federal law protecting workers from being replaced by machines. The Worker Adjustment and Retraining Notification (WARN) Act, passed in 1988, requires large employers to give 60 days’ notice before mass layoffs—but it doesn’t cover automation or AI-driven job cuts specifically.

For more on how AI is displacing jobs across different sectors, see our in-depth explainer.

What You Can Do

• Stay informed about your industry’s risk. Use resources like our job risk tool to see how likely your role is to be automated.
• Build skills that AI can’t easily replace. Jobs that require empathy, hands-on work, or creative problem-solving are harder for machines to do. Check out our guide to AI-proof careers.
• Talk to your union or workplace representative. Ask what protections exist if your job is targeted for automation, and push for retraining or transition support.
• Support policies that protect workers. Contact your elected officials about the need for stronger rules on AI-driven layoffs, like those in the EU’s AI Act.
• Prepare financially. If you work in a high-risk field, consider building up savings or exploring side gigs that use skills AI can’t match yet.

The Bottom Line

The Goldman Sachs warning puts a human face on the risks of AI in a downturn: millions of workers could lose their jobs, and many may not get them back. While technology can make life easier in some ways, it also brings new challenges for job security and family stability. Staying informed, building new skills, and pushing for fairer rules are the best ways to prepare for a future where AI is part of everyday life—but not at the expense of everyday people.