Stop me if you’ve heard this before: “A man walks into the office and asks a computer to write an article regarding the intersection of productivity, artificial intelligence, and automation.”
“The integration of artificial intelligence (AI) and automation is fundamentally reshaping productivity across various sectors… by automating routine tasks, optimizing workflows, and providing data-driven insights that facilitate better decision-making. For instance, AI tools can handle repetitive tasks such as scheduling, data entry, and customer inquiries through chatbots, allowing employees to focus on more strategic initiatives.”
Okay, that reads a bit like a sales pitch by an AI information technology consultant. But the fact is that AI is here; is rapidly being adopted across the U.S. economy; and will be integrated into our daily lives for years, if not decades, to come. The question for economists is whether AI will usher in an era of higher productivity growth. Productivity measures how much the average worker can get accomplished in an hour, and increased productivity fuels higher economic growth—and rewards for investors.
In fact, one of the reasons the U.S. economy (and therefore the U.S. stock market) has performed better than other developed countries since the Great Recession, is the significantly higher level of investment U.S. companies have made in time-saving technology, which has driven productivity higher (see chart below). Going forward, there inevitably will be winners and losers, as well as changes in jobs and career paths for many, but the proverbial genie is out of the bottle. And, after all, AI is simply an extension of humanity’s eternal quest to build machines—physical and digital—that can do more work for us.
Time may not literally be money, but we would encourage our clients and readers to look for and lean into AI; time saved on one project creates more time for the next, regardless of whether it’s work or leisure.
W. Gregory Richardson, CFA