Mounting calls to curb artificial intelligence (AI) development in the interest of safety have raised new questions about what such a slowdown could mean for the U.S. economy.
The AI boom, characterized by massive infrastructure investments and stock market gains, has helped drive economic growth. Just last week, Goldman Sachs’ chief U.S. equity strategist said AI investment was driving roughly half of the S&P 500’s earnings growth this year.
The stakes of this AI-powered growth matter to everyday Americans whose savings may be invested in the S&P 500—where, as CFR’s Rebecca Patterson pointed out in a recent YouTube short, just ten tech companies account for one-third of the index’s market cap.
What would happen to the U.S. economy if tech giants agree to slow the pace of the technology’s development? The Daily Brief reached out to two CFR experts for insight.
Sebastian Mallaby stressed that a slowdown “is by no means certain.” The public debate over AI in recent days—spurred by safety warnings from researchers and pacing pledges from industry leaders—mainly illustrates the “general policy uncertainty about AI development,” he said.
But if AI development did slow, it could impact the stock market and have knock-on effects, Mallaby acknowledged. “When the stock market falls, people’s savings diminish, causing them to spend less, leading to lower growth.” A slowdown would also scale back data center construction, “which drives a chunk of economic growth,” he added.
Tony Oweke was similarly circumspect. Calls to regulate AI aren’t new and on their own may not materially impact the market, he said.
How Americans experience a slowdown “comes down to what people own and what they pay,” Oweke said. “Stock ownership in general is very concentrated: the wealthiest 1 percent hold about half of the stock owned by American households, while the bottom half of households hold roughly 1 percent.” As a result, most Americans would feel the effects of the slowdown indirectly.
There could also be economic benefits to an AI slowdown, Mallaby pointed out. Treasury bond yields—which have been rising—would fall, “easing the budget positions of indebted economies” including the United States, France, Japan, and the United Kingdom.
Meanwhile, to read more about safety in AI development, check out the new expert take from CFR’s Vinh Nguyen, which explored the need for enforceable standards and independent oversight. We’ll be back tomorrow with more.
