Here’s a thought I can’t shake: the next recession might not slow down AI adoption in business—it might actually turbocharge it.
We’ve all seen AI go from buzzword to priority over the past few years. But the big question in 2025 and beyond is whether a potential economic downturn will slow the adoption of AI and put companies back into a "traditional methods only" strategy for doing business.
Based on everything I’ve been watching—from adoption data, economic cycles, and expert sentiment—I feel strongly that the pressure of a recession could turn businesses to AI at an even faster rate when they need to work lean and do more with less.
Let’s unpack why.
By early 2025, more than 70% of U.S. companies are using AI in at least one part of their business. And in talent acquisition specifically, AI is reshaping how companies find, evaluate, and hire candidates. From automated resume screening to AI-generated outreach to predictive analytics, the tools are here, and companies are investing.
Even in HR departments—traditionally slower to embrace automation—AI usage jumped from 58% in 2024 to over 70% in 2024. I’ve spoken with recruiting leaders who are already touting the time savings and efficiencies. It’s not just hype anymore. The shift is happening.
Let’s look at history. The 2008 financial crisis? It gave rise to a wave of automation of core business processes in the form of ERP and other support systems. The 2020 COVID collapse? That wasn’t just a health crisis—it was a massive accelerant for tools like remote work platforms, video conferencing, and messaging applications. In fact, McKinsey said at the time that companies made five years of digital progress in just eight weeks during the early pandemic response.
Downturns tend to do that. They make leaders prioritize efficiency and cost reductions. When revenue stalls, headcount shrinks, and pressure mounts to "do more with less." At this point, AI assisted processes become a survival tool and not a nice-to-have.
Gita Gopinath of the IMF made a powerful point recently: the real wave of AI replacing jobs may not happen during boom times, but during a recession. When budgets tighten and companies need to cut costs, that’s when automation moves from theory to requirement.
I agree with Gopinath. It’s easier to replace roles when hiring is frozen, and even easier when layoffs are already on the table. That’s when a company might flip the switch on an AI system they’ve been piloting for months. And when the economy recovers those jobs don’t always come back. The overall effect on the worker and the economy as a whole will be hotly debated. We will not fully understand the effect of AI until we are studying it as history and not predicting it as conjecture.
That said, not every AI initiative will thrive in a downturn. Companies will prioritize tools that offer clear, measurable ROI. That flashy AI "innovation lab" with a 3-year horizon? It might get shelved. But, the AI recruiting assistant that saves money, picks better hires when every position counts, and sifts through the high volume of applicants that are inevitable in downturns? That one gets funded.
In fact, this is what I expect: recession-era AI adoption will be tactical, not experimental. Businesses will double down on the use cases that work—automated candidate screening, predictive scheduling, AI chatbots for support centers—and pull back on moonshots.
For recruiters, the impact could cut both ways. Some companies will freeze hiring and slow their tech investments. But others will seize the opportunity to upgrade their recruiting processes, especially if they're working with leaner teams. AI tools that make those teams more effective won’t just survive—they’ll thrive.
Interestingly, I’m already seeing this mindset in some clients. They’re planning for slower growth, but still investing in hiring tech that can help them be nimble. They see the recession not as a pause, but as a chance to build a more efficient foundation. These are the companies that will survive a slowdown and thrive in the recovery.
If there’s one thing I’ve learned watching tech adoption across downturns, it’s this: recessions don’t kill innovation. They punish the indecisive.
The companies that already have AI in place—or at least a solid roadmap—will use a downturn to streamline. The ones still on the sidelines may find that by the time they get serious, their competitors have already pulled ahead.
So, will a recession slow down AI adoption? In some corners, yes. But overall? It’s more likely to leave behind the doubters and solidify AI’s role at the heart of modern business.
And in talent acquisition? AI won’t just weather the storm. It might be the umbrella.
If you’re preparing for what’s ahead, now’s the time to think critically about which AI investments will help you run leaner, smarter, and faster—regardless of the economic cycle. Want to talk about AI or talent acquisition? Reach out to me at jeff@foveaai.com.