George Hahn

In March, Musk announced that Tesla would increase headcount, adding, The output per human at Tesla is going to get nutty high.

The following month, Tesla laid off 10% of its workforce due to poor sales.

What we're seeing isn't the prelude to a job apocalypse, but a low-hire, low-fire labor market where unemployment rates for tech workers and everyone else are converging around the Fed's target rate of 4%.

Catastrophizing is a narrative device the hyperscalers deploy to divert capital flows to them and justify their capex.

Every new technology in history has gone through a similar arc of creative destruction.

I don't see why AI is any different.

As economist Joseph Schumpeter observed in 1942, economic progress in a capitalist society means turmoil.

So far, the turmoil attributed to AI has been more hot air than hard data.

Last fall, I wrote that America is one big bet on AI, as the MAG-10 account for 40% of the S&P's market cap.

Since ChatGPT launched in November 2022, AI-related stocks have registered 76% of the S&P 500's return, 87% of earnings growth, and 90% of capital spending growth.

If AI sneezes, the rest of the economy will catch a cold, i.e.

plunge into recession.

Based on Shiller's analysis, we'd likely blame AI.

Nevertheless, according to Ernie Tedeschi, chief economist at Stripe and former chief economist for the White House Council of Economic Advisors, layoffs come in recessionary bursts rather than the moment technology renders a profession obsolete.

Widespread displacement of travel agents didn't happen immediately during the dot-com boom, Tedeschi wrote.

Rather, it was the bust that drove displacement.

When the economy recovered, however, professions rendered obsolete by technology didn't return to pre-downturn levels.

But the profession doesn't entirely disappear either.

Travel agents still exist, though they're more sensitive to future downturns relative to the broader labor market, suggesting that as jobs gradually disappear, more workers pivot.

Maybe there isn't a bubble, or if there is, maybe it doesn't burst.