> The tech succeeds at the goal - humans are mostly not needed anymore other than for menial low-paid work. Economy slows, then almost completely stops.

Economy slows or stops when AI robots are producing goods and services for much lower cost than human workers? Perhaps, but I think the obvious next development would be massive deflation: even on welfare or UBI, you would be able to afford the same quantity of goods/services than with normal wage today, because the stuff produced by robots would be significantly cheaper. Just like stuff produced in factories is much cheaper than hand-made stuff we had before factories were invented.