The economy and stock market look fine for now, but two warning signs could flip the outlook from bullish to a painful recession: AI companies failing to turn a profit, and a weakening job market.

• AI spending is circular — Nvidia funds cloud startups that buy Nvidia chips with customer deposits, and the whole loop depends on AI labs like Anthropic and OpenAI eventually making real money.
• Anthropic's upcoming IPO filing is expected to show big losses, but there is a real path to profit if AI expands from coding tools into software for finance, healthcare, and other office work worth trillions in wages.
• The bigger near-term danger is jobs: workers in AI-exposed roles are seeing weaker raises, inflation-adjusted wage growth is close to turning negative, and companies are quietly hiring fewer people in sales and support instead of firing.
• Studies claiming AI is creating jobs are shaky — the widely cited Ramp study excluded bankrupt firms and companies that shrank, and leaned on venture-backed startups that hire no matter what.
• If unemployment climbs enough to trigger the Sahm rule recession signal, markets would top out, AI spending would slow, and construction jobs tied to the data-center boom would vanish.

Outlook: Neither warning sign is flashing yet — hours worked are rising and the job market is improving — but a rollover in labor data or worsening AI margins over the next year would be the cue to turn bearish fast.