AI isn’t killing jobs yet—CEOs are using layoffs to fund a $2.5 trillion arms race

• In today’s CEO Daily: Diane Brady tackles one of the most urgent questions of the day.
• The big leadership story: Anthropic v. U.S.
• The markets: Up globally, buoyed by Trump’s remark that ‘the war is very complete, pretty much.’
• Plus: All the news and watercooler chat from Fortune.

Good morning. Is AI really killing U.S. jobs?

Brad Conger doesn’t think so. As the chief investment officer of Hirtle Callaghan asserts to my colleague Shawn Tully,  “AI’s not replacing jobs, but job cuts are funding AI expenditures.” Conger has a point. With Gartner anticipating global capital spending on AI to hit $2.5 trillion this year, that money has to come from somewhere.

With the U.S. at war, a volatile stock market and increased fears of a 1970s-style stagflation—not to mention leaders like Block CEO Jack Dorsey already citing AI as a reason to slash headcount—it’s worth pausing to contemplate what’s really behind the job cuts. Nailing down the root cause will shape the perceptions and policies around unemployment, and the ability of leaders to do something about it. A few points that I think about:

There are troubling trends. Some were skeptical about the job numbers before the latest drop. The current unemployment rate, now at 4.4%, doesn’t include those who have given up looking for work or are stuck in low-paid jobs that don’t match their skills and aspirations. Even that broader measure, which was 7.9% in February, doesn’t capture sluggish wage growth, eroding optimism, rising costs, and other forces that have long shaped the employment picture. Few understand that complexity like the beleaguered economists at the Bureau of Labor Statistics, who’ve been consistently revising numbers downward of late.

AI leaders can’t predict AI’s impact. ​​Anthropic just put out a chart that claims to quantify AI’s impact on jobs in different professions. But let’s remember that the titans of tech often have a hard time time predicting the future, or recognizing excellence in a form that doesn’t remind them of themselves. It’s why Elon Musk and Mark Zuckerberg can’t see the value of great managers. Humans can be fallible, as are the algorithms they create.  

Some truths are timeless. When consumers fuel 70% of your economy, you need people with money to spend. That’s why Henry Ford doubled his workers’ wages. Certainly cost-cutting can buy you time, and AI may be able to scale and amplify your talent. But a sluggish economy with rising prices, volatile stocks and CEOs feeling pressure to cut costs isn’t a good recipe, regardless of the technology that’s coming down the pipe.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

This story was originally featured on Fortune.com