AI Will Lead to a Recession, According to Klarna CEO

A recession is looming, and AI will be the cause, according to Klarna CEO Sebastian Siemiatkowski. AI has been replacing many white-collar jobs across numerous companies, including Klarna.

AI is being implemented at an incredible pace by both large and small companies. Yet, this adoption of technology means less reliance on humans to complete various tasks. While companies may benefit for a time, laid-off employees are left without a paycheck and the means to consume, meaning a recession is likely to follow.

“My suspicion … is that there will be an implication for white collar jobs. And when that happens, that usually leads to at least a recession in the short term,” Siemiatkowski explained on the “Times Tech Podcast,” per Fortune. “And I think, unfortunately, I don’t see how we could avoid that with what’s happening from a technology perspective.”

Klarna itself has demonstrated the impact AI is having on jobs. Just in the last two years, the buy now, pay later (BNPL) company laid off about 2,500 employees as the jobs could be handled by technology and initiated a hiring freeze. In February 2024, Klarna began using an OpenAI-powered chatbot that could perform the work of 700 full-time customer service representatives.

Klarna Faces Rising Credit Losses Amid Economic Uncertainty

Besides Siemiatkowski, other tech leaders have sounded the unemployment alarm as it relates to AI. A recent statement from Anthropic CEO Dario Amodei warned that approximately half of white-collar jobs could be gone by 2030. Unemployment could jump 10% to 20% over the next five years, he noted.

“It sounds crazy, and people just don’t believe it,” Amodei told Axios.

Yet, Google-parent Alphabet seems to hold the opposite view. While acknowledging AI is not going away, CEO Sundar Pichai implied the tech opens up advancement opportunities. When AI replaces a job, then Google promotes the employee instead of terminating them.

Unemployment and a recession could mean trouble for BNPL companies like Klarna. As people struggle to pay bills, discretionary spending for non-essential goods like electronics declines, meaning fewer consumers borrowing money from Klarna.

The BNPL firm has already revealed losses as consumers pull back purchases due to inflation and an uncertain economy. According to Klarna’s first quarter earnings report, credit losses amounted to $136 million, a 17% increase compared to the period last year.