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OPINION

AI Should Give Americans Good Reason to Be Optimistic

AI Should Give Americans Good Reason to Be Optimistic
(Dreamstime)

Peter Morici By Wednesday, 01 May 2024 03:57 PM EDT Current | Bio | Archive

Americans are down on the economy, and many believe the country is headed in the wrong direction. Yet the aggregate metrics of U.S. economic health are good.

Consumer spending and business investment, especially in industrial equipment, information processing and software, continue to power growth, while U.S. unemployment has been below 4% for the past 26 months.

Unfairly, U.S. President Joe Biden gets poor marks for his handling of the economy and consumer sentiment remains below pre-pandemic levels. Yet after inheriting an economy shut down and plagued by supply chain disruptions, the Biden administration has turned things around — real wages, for example, have been rising since May 2023.

What’s ailing Americans

America was built on the conviction that earnest individuals could succeed following a basic prescription: get a good education; buy a home; invest in financial markets, and put trust in the economy to reward your efforts.

Yet between 1999 and 2023, college costs soared 189% — more than the consumer price index at 83% or even health care at 119%. Half of all freshmen enrolling either drop out or end up in a job requiring only a high school education and gain a little economically from college.

On the job, employees are expected to offer a professional commitment —learn the values and serve the goals of the company. Yet workers can no longer trust that employers will reward good service. Whereas layoffs were once uncommon — associated with sagging sales and a distressed balance sheet — large layoffs have become a commonplace management tool to boost productivity and redirect company focus.

Consider Meta Platforms META, -2.41%. With strong cash flow and profitability in 2023, the company cut workers aggressively while investing in artificial intelligence. The stock will now pay dividends — Mark Zuckerberg personally will pocket $700 million.

For workers who survive layoffs, the rewards are more distant. U.S. home prices have more than tripled since 1999, whereas wages have risen about 135%. With so many burdened by student debt, half of millennials and Gen Zers say they live paycheck to paycheck.

The tide is turning

Artificial intelligence (AI) is about to make Americans much more prosperous. Goldman Sachs estimates that AI could increase annual U.S. GDP growth by 1.5 percentage points over a decade. It’s the post-industrial analog to the mechanization of agriculture and moving assembly line, which permitted farmers and factory workers to grow food and manufacture goods more efficiently. But those also forced many farmers and workers to move and find new employment.

The wealth created by those gains permitted Americans to keep their children in school through high school, build great universities and support scientists to pursue the research that gave us jet travel, modern computers, the internet, the miracles of modern medicine — and now AI.

Already, Neuralink’s brain implant and Apple’s Vision Pro are precursors of a synergism between humans and computers. This will enable us to access the cloud, web and AI engines almost as quickly as we can think.

These devices won’t look like Apple’s Vision Pro, but more likely a combination of Neuralink’s brain implant and the more wearable Google Glass that will permit enhanced reality with many apps superimposed on our field of vision. These devices will enable the synchronized application of apps to draft white-collar tasks, like an insurance adjustor’s repair estimate or an industrial site selector’s report. This will be the next wave after the AI’s initial boost to productivity runs its course.

Higher productivity is not a given. The U.S. Congressional Budget Office has issued dire predictions about ballooning annual federal deficits and national debt over the next decade as the population ages and expenditures on Social Security, Medicare and other entitlements outpace economic growth.

However, properly targeted government spending could pull the economy forward — keep demand hot enough to pull workers displaced by AI into new pursuits and help foster new industries. Economic growth then will well exceed the CBO’s expectations.

The promise of the future is too good to not be optimistic.

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

© 2024 Newsmax Finance. All rights reserved.


Peter-Morici
Americans are down on the economy - but there are good reasons to be optimistic. Artificial Intelligence is about to make Americans more prosperous.
investing, jobs, stocks, artificial intelligence, education
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2024-57-01
Wednesday, 01 May 2024 03:57 PM
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