Economic and labour policies have a considerable influence on health and well-being through direct financial impacts, and by shaping social and physical environments. Strong economies are important for public health investment and employment, yet the rapid rise of generative artificial intelligence (AI) has the potential to reshape economies, presenting challenges beyond mere temporary market disruption. Generative AI can perform non-routine cognitive tasks, previously unattainable though traditional automation, creating new efficiencies. While this technology offers opportunities for innovation and productivity, its labour-displacing potential raises serious concerns about economic stability and social equity, both of which are critical to health. Job displacement driven by generative AI could worsen income inequality, shrink middle-class opportunities and reduce consumer demand, triggering recessionary pressures. In this article, we propose the existence of an AI-capital-to-labour ratio threshold beyond which a self-reinforcing cycle of recessionary pressures may emerge, and which market forces alone cannot correct. Traditional responses to such pressures, like fiscal stimulus or monetary easing, may be ineffective in addressing structural disruptions to labour markets caused by generative AI. We call for a proactive global response to harness the benefits of generative AI while mitigating risks. This response should focus on reorienting economic systems towards collective well-being, as emphasized in the World Health Assembly resolution Economics of health for all and the United Nations' Global Digital Compact. Integrated strategies that combine fiscal policy, regulation and social policies are critical to ensuring generative AI advances societal health and equity while avoiding harm from excessive job displacement.