Dr. Adam Posen

There was a nice piece by Jason Furman in The Wall Street Journal discussing this.

The angle I would take is just as Governor Waller or Kevin Walsh says with the tariffs,

you get a real income shock, in this case positive from AI.

It's indeterminate ahead of time, to use a fancy word, how much of that shows up as income and how much of that shows up as price disinflation.

And my reading of the historical evidence is when you get a new technology, most of the disinflation stuff comes with a lag because that only comes when companies start restructuring, changing their workforces to figure out how to use the stuff.

whereas some of the income growth, the productivity growth, you get up front just because we've all got a new toy.

So I think there's room for me to be plenty wrong, but I think we're going to end up pretty high inflation and a Fed that's behind the curve.

yeah well thank you for putting it that way carol i would sort the risks by two categories the realistic and unrealistic as you said but then at what time frame they hit i think the realistic risk for the u.s in the next three to 12 months is probably inflation is the biggest risk

I'm not that worried about a downside unemployment.

I'm not that worried about trade wars turning into hot wars with China.

I mean, I'm worried about it.

It'd be terrible, but I'm not that worried it's likely.

But if we start looking out one, two years, then to me, the realistic risk starts to get into some of those demographic issues you and Tim just mentioned.

because we are cutting off a lot of people from the workforce by excluding or deporting migrants.

And there's a lot of things that happen, for example, the female labor force participation and prime age women.

If you don't have cheap available health care and cheap available

a child care and the budget doesn't support that in out of the federal government and health care is cut back if they don't pass the subsidies for obamacare and even if they do it's still cut back so those are the things in the next couple years but then when we think beyond that then you've got a tug of war between the positive impact of ai

and the potential for large-scale unemployment as people adjust to AI.

And there, I got to say, not only I, but the economics profession has no clear idea.

There are a few people out there with very strong opinions, but there's no consensus, and we're still working on that.