The finance industry continues to be hemorrhaging jobs — and artificial intelligence could be partly to blame. So could interest rates.
The financial activities sector, spanning finance, insurance and real estate industries, has lost 121,000 jobs since peaking in May 2025, according to the Bureau of Labor Statistics report released on Friday. The latest numbers raise the possibility that the industry’s job market is contracting as AI is increasingly adopted.
“It stands to reason, at least some of it is due to AI,” said Ryan Young, a senior economist at the libertarian think tank Competitive Enterprise Institute. “AIs can do a lot of the grunt work that a lot of finance quants are doing right now, but humans still have to think of what questions to ask those models. They have to interpret what those models say, make decisions based on those.”
Financial firms have for years predicted AI would reduce their need for operations and technology staff, and increase roles in governance and compliance. Banks have outfitted their employees with AI training to boost productivity and invested tremendous amounts in the rapidly proliferating tech.
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Financial activities shed 14,000 jobs in July and hiring declined in the two months prior, though job openings shot up in June, the most recently available shows.
The sector lost 9,000 jobs alone last month in the field of credit intermediation, which lends funds to individuals and businesses. Those jobs span customer service representatives and bank tellers to mortgage loan officers and financial managers.
The losses could be a signal that borrowing in some areas is slowing down, as the market increasingly anticipates the Federal Reserve will hike interest rates this year. The central bank is staring down persistent inflation, which is creeping up as President Donald Trump’s prolonged war in Iran raises oil prices and throws the economy’s near-term future into uncertainty. Price pressures from Trump’s tariff policies worsen the problem.
Ben Zipperer, senior economist at the left-leaning Economic Policy Institute, argues that finance’s employment slowdown has everything to do with higher interest rates starting in the second half of 2022, and little to do with AI.
“Very few employment changes right now are due to AI. Were AI driving a substantial reorganization of the labor market, we’d be seeing much faster productivity growth than the current slow rates,” Zipperer texted NOTUS.
Credit intermediation workers have been on the front lines of the industry’s job losses since interest rates began rising post-pandemic — and they may face further labor market contractions.
If the Fed increases rates to tamp down inflation, borrowing will become more expensive for financial institutions and Americans looking for a home or credit loan.
Lending to private credit borrowers has already fallen sharply this year. Mortgage lending rates, which have been on an upward trend for most of this year, increased over the last month, according to data from Freddie Mac.
The jobs report released Friday counted job losses totaling 23,000 in July, compared to an average monthly gain of 34,000 in the last year. It further revised June numbers from 57,000 to 20,000 jobs added. The unemployment rate ticked down by a tenth of a percentage point to 4.1%.
The financial sector was not the only industry to experience job losses. Local government education lost 50,000 jobs and retail trade leaked 19,000 jobs, while health care continued adding jobs.
This story has been updated with additional expert analysis about the latest jobs report.
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