AI's Productivity Promise: A Mirage?

Ah, the AI boom. The narrative we can’t escape is that it's the magic bullet for productivity gains. But hold your horses. Jim Paulsen, a seasoned Wall Street vet, isn't buying it. He’s throwing cold water on the idea that AI's so-called productivity boost will lead to economic glory.

The Layoffs Mirage

Recent years have seen giants like Amazon and Meta chopping their workforce, citing AI as the efficiency driver. But Paulsen’s poking holes in this story. Are fewer workers really a sign of legitimate productivity? Or just a mirage of efficiency on paper?

Paulsen’s not convinced that AI’s productivity bump is the economic windfall it’s cracked up to be. He’s looked at job growth and productivity in the U.S. since the dot-com era. Spoiler: it’s not the rosy picture tech optimists hoped for.

Show Me the Growth

Paulsen highlights a harsh reality. While tech companies boast about a 12% productivity spike, the rest of the economy creeps at 2%. And this spike? It came only after hiring came to a halt. Looks like productivity but doesn’t smell like growth.

“Since the dotcom peak, job creation outside the information sector has been snail-paced, with the sector itself shrinking,” he notes. The link between productivity and real economic health? Tenuous at best.

Déjà Vu or New Frontier?

It’s tempting to compare today’s AI frenzy with the dot-com days. But Paulsen says, think again. The game’s changed. From 1960 to 1999, better productivity meant more jobs. Post-2000, that link’s reversed. Are we witnessing a new age or repeating history’s mistakes?

Paulsen’s message? Don’t take the AI productivity hype at face value. Sure, AI’s shiny and new, but will it sustain growth? Show me when the dust settles. Until then, color me skeptical.