The impact of AI on the job market is starting to show up in the data analyzed by Wall Street firms — so far it's pretty modest, but certainly real.

Why it matters: New reports from Morgan Stanley and Goldman Sachs come in the wake of a deluge of doomsday predictions and tell a more nuanced story of how AI is changing the job market.

Zoom in: Goldman Sachs looked at occupation-level federal data and scored jobs by AI exposure: separating roles that can be completely substituted by AI (proofreader) and those that can be considered complementary (doctor).

What they found: AI has both created and destroyed jobs over the past year.

• It reduced employment in occupations that are easily substituted by AI, translating to a slight 0.16 percentage point increase in the unemployment rate.
• At the same time, AI decreased unemployment by 0.06 point in jobs that are "augmented" by AI — roles that rely on things that machines cannot replace, like human judgment, interpersonal interaction and accountability.

Zoom out: Overall, AI raised the unemployment rate by just 0.1 percentage point, they find.

State of play: Morgan Stanley did a similar analysis — separating jobs by AI exposure. They come to a similar conclusion: AI added 10 basis points to the overall unemployment rate at most. That's just 0.1 percentage point.

Between the lines: If you're focusing only on how AI displaces workers, you're missing the story, Joseph Briggs, an economist at Goldman Sachs, told my colleagues at Axios Macro in a recent interview.

• Morgan Stanley's analysis puts it this way: "Gen AI's impact on labor demand is double-edged: The same technology that can automate tasks can also augment labor, raising productivity."

Here's a great example of how experts can have a hard time seeing the difference between AI substitution and augmentation.

• Ten years ago, the godfather of AI, Geoffrey Hinton, famously said: "We should stop training radiologists now. It's just completely obvious that within five years, deep learning is going to do better than radiologists."
• Instead, what happened was that radiologists have broadly adopted AI and are using the tools to do their jobs better, as the New York Times reported last year.
• The number of radiologists has increased, and their pay has gone up since Hinton's comments, the Morgan Stanley paper points out.

Friction point: Companies this year are talking about AI displacing workers a lot more than they are talking about AI driving hiring, per an analysis the bank did of company earnings call transcripts.

• They suggest that this might just be executives telling a story that investors want to hear: "Markets are rewarding cost-cutting narratives, which creates a strong incentive for firms to frame efficiency programs as AI-driven," they write.
• "Transcript momentum should be read as directional, not definitive proof of incremental job losses."

The bottom line: AI's impact on the labor market is small so far, and it's more complicated than the doomers want you to think.

Confidence among American small-business owners fell for a second consecutive quarter, according to the U.S. Chamber of Commerce Small Business Index released this morning.

Why it matters: The numbers signal a "growing unease" over rising inflation and the Iran war, the Chamber said in a news release.

Zoom in: The survey took place from Feb. 25-March 11, and if it had been done before the war started, the results would've been less striking, Neil Bradley, executive vice president at the U.S. Chamber of Commerce, tells Axios.

Reality check: The index is still higher than this time last year, after Trump's "Liberation Day" tariffs crushed business confidence.

By the numbers: Researchers surveyed 750 small-business owners and operators who run companies with 500 or fewer people.

• 53% of the small-business owners said inflation was their top challenge, up from 45% in the last three months of 2025.
• Only 37% said they expect to make new investments in the year ahead, down from 44% in Q4.

Stunning stat: Just 28% of small-business owners say the U.S. economy is in good health — down 10 points from the previous quarter.

What to watch: So far the deterioration in sentiment is all wrapped up in how small-business owners are seeing the future. But if the war goes on long enough, those expectations will drag on businesses' current decision-making.

• That's the risk you run, Bradley says.

Consumer M&A has powered dealmaking, but investors are wary that most of the deals will work.

The big picture: Shares of Unilever, McCormick and Sysco are all underwater in the aftermath of their headline-grabbing deals, and Estée Lauder's conversations with beauty brand Puig have weighed on its stock.

Zoom in: Since March 20 — when talks between consumer product giant Unilever and spice company McCormick first published — both companies' stocks have sold off.

• Food distributing giant Sysco's $29 billion deal for Jetro Restaurant Depot, a wholesale restaurant supplier, announced last week, wasn't warmly received either.

Zoom out: Consumer brands tie-ups have a mixed history of success. Just look at what's happening with Kraft Heinz, which recently pulled back its plan to split up — back to where it was in 2015 — even though the company has flailed recently.

• Meanwhile, rising oil prices and overall macro uncertainty are weighing on investors — while companies are making dramatic deals in an attempt to survive uncertainty.

Context: Global M&A in totaled about $1.2 trillion in the first quarter, up 26% in value.

• McCormick and Sysco were two of the 10 largest deals in the quarter, per LSEG.

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