550: The Only Economists Worth Listening to Right Now

If you spend enough time listening to economists, you'll notice something interesting. They rarely agree. Over the years on the Wealth Formula Podcast, I've interviewed economists from across the spectrum—Keynesians, Austrians, monetarists, market practitioners, academics. Some are bullish about the next decade. Others are extremely pessimistic. But there's one thing that almost all of them have agreed on in private conversations. The entire economic outlook changes if artificial intelligence dramatically boosts productivity. And that possibility is no longer theoretical. The Latest Jobs Report Was Weak Last week's employment report came in significantly weaker than expected. Instead of adding jobs, the U.S. economy lost about 92,000 jobs in February, when economists had expected modest growth. The unemployment rate ticked up to 4.4%, and several sectors showed surprising weakness. Even healthcare, which has been one of the most reliable job creators in the entire economy for years, actually lost roughly 28,000 jobs last month. There are explanations floating around for this. Some point to strikes and temporary disruptions. Others point to geopolitical issues or policy changes. But there's a bigger question worth asking: Is this the very early sign of something structural? In other words—are we already starting to see the early effects of AI-driven productivity changes? The Wild Card That Changes Everything Every economic model—every single one—is based on assumptions about productivity. If productivity grows slowly, you get one set of outcomes. If productivity suddenly accelerates dramatically, you get something entirely different: • Faster economic growth • Lower production costs • Strong deflationary pressures • Potential disruption to labor markets And that's exactly what AI could bring. Some economists believe the next decade could look sluggish because of demographics and debt. Others think inflation and fiscal pressures will dominate. But almost all of them admit the same thing: If AI dramatically increases productivity, their forecasts could be completely wrong. The Fed's Risk There's another implication here that matters for investors. If AI is already starting to push productivity higher and costs lower, the Federal Reserve could easily misread the signals—just like they did during the inflation surge a few years ago. Central banks tend to react to data after the fact.Technology moves much faster. If policymakers underestimate the economic impact of AI, they could once again find themselves behind the curve. Fortunately, it appears increasingly likely that Kevin Warsh may become the next Federal Reserve chair, and he is widely viewed as someone who takes technological change and productivity dynamics seriously. That could matter a lot. This Week's Episode This week on the Wealth Formula Podcast, I interview another economist—one who leans heavily toward the Austrian school of economics. On many issues, his outlook is quite skeptical about the future of monetary policy and debt. But what was fascinating is how the conversation evolved toward the end. Even he acknowledged that his entire outlook depends on what happens with AI. In other words, even the skeptics recognize that this technology could fundamentally reshape the economy. And if that happens, many of the assumptions investors rely on today will need to be reconsidered. Listen to the full episode now. The only forecasts that matter right now are the ones that understand how profoundly AI could change the economic landscape. And that story is just beginning.