The Trigger: Claude Code
In January 2026, Anthropic launched Claude Code - a "vibe-coding" tool that could build, debug, and ship software from plain English prompts. Within days, developers were replacing junior engineers. Within weeks, Wall Street noticed.
The result: a $1 trillion software industry selloff. Stocks of companies whose products could be replicated by AI in minutes cratered. SaaS, dev tools, consulting firms - anything that sold human labor packaged as software got hammered.
This wasn't a correction. It was a reclassification. The market decided that an entire category of human work had just become optional.
Ghost GDP
The term came from a viral essay by analyst Citrini. The thesis: AI is producing economic output that shows up in GDP numbers but doesn't translate to jobs or wages. The economy grows on paper while actual humans experience recession.
"A huge disconnect between the data and the reality will keep widening, and AI will only make it worse." - Kavya Ganapathi, economist
The mechanism is simple. A company replaces 200 customer service agents with an AI system. Revenue stays the same. Costs drop 80%. Profits soar. GDP contribution unchanged. But 200 people just lost their income, and their spending disappears from the economy.
Multiply that across every industry simultaneously, and you get Ghost GDP - growth that's real in spreadsheets but hollow in the streets.
Block Cuts 40% of Its Workforce
Jack Dorsey's Block (formerly Square) announced it was laying off 40% of its entire workforce, explicitly citing AI as the reason. Not "restructuring." Not "efficiency." AI. The company said AI tools now handle work that previously required thousands of employees.
S&P 500 futures and Nasdaq futures fell overnight on the news. If a major fintech with $22B in revenue says it doesn't need 40% of its people anymore, what does that mean for every other company?
- Block: 40% workforce reduction - AI replacement
- Software sector: $1T selloff after Claude Code launch
- White-collar recession: Fortune calls it "the new collar economy"
- Senator Schumer: Called for emergency AI workforce hearings
- Viral doomsday essays: Multiple went mainstream this week
Meanwhile: OpenAI Raises $110 Billion
On the exact same day that markets panicked about AI destroying jobs, OpenAI closed the largest private funding round in history. $110 billion. Valuation: $840 billion.
The investors:
- Amazon: $50 billion (largest single investment)
- Nvidia: $30 billion
- SoftBank (Masayoshi Son): $30 billion
Pre-money valuation: $730 billion. That makes OpenAI worth more than JPMorgan, more than Visa, more than 95% of the S&P 500 - and it's still private.
The cognitive dissonance is staggering. Wall Street is simultaneously terrified of AI and pouring the largest checks in history into it. The fear and the greed aren't opposing forces - they're feeding each other.
The Two Economies
What emerged this week is the clearest picture yet of the AI-split economy:
Nvidia, OpenAI, Anthropic, cloud providers, AI infrastructure companies. Printing money. Can't hire fast enough (for the roles they still need). Valuations in the trillions. This economy is booming.
Software companies being disrupted. White-collar workers being replaced. Service businesses being automated. SaaS companies watching their moats evaporate in real-time. This economy is entering recession.
The GDP numbers will show growth. The unemployment numbers will lag by months. By the time the official data catches up, the transformation will already be irreversible.
What Happens Next
The February 2026 AI scare isn't a scare. It's a preview. Claude Code was one product from one company. GPT-5 is coming. Gemini 2.5 is coming. Each release will obsolete another layer of human work.
The question isn't whether AI will replace jobs. Block just answered that. The question is how fast, and whether governments can adapt before the social contract breaks.
Senator Schumer is calling hearings. Viral essays are going mainstream. But the money is already placed - $110 billion on one bet, from companies that see the future and are buying their seat at the table.
The AI economy has split. Pick your side.
Sources: Fortune, Axios, Reuters, TechCrunch, Bloomberg, Guardian, CNBC, Economic Times.