AI And The End Of Recessions As We Know Them

Added: 2026-06-01

[00:00:00]Since chatbt burst onto the scene in November of 2022, all of society was forced to take a really hard look at how AI had the potential to completely reshape all aspects of our lives. Forbes recently reported that AI now even has the potential to completely reshape how we view recessions. Because if AI is contributing to a booming economy, that doesn't necessarily mean that growing economy is all that healthy. The reporter of that piece, my colleague, Forb's senior writer, Brandon Cotch Coden, joins me now to discuss.

[00:00:38]>> Brandon, I really appreciate you coming on.

[00:00:41]>> Yeah, thanks for having me.

[00:00:42]>> You recently wrote a piece about AI in the economy, and I'm sure you can relate to this, but whenever I've had a conversation in the past couple of years about AI, it's been a real mixed bag.

[00:00:52]Some people are really excited about AI and the potential possibilities it could unlock both professionally and personally. Other people are a bit more apprehensive. They have some real existential concerns when it comes to AI or there's real palpable fears. People thinking, hey, is AI going to steal my job? But you recently wrote that AI has the potential to disrupt the way that we view recessions. But before we get into how, I do want to zoom out just a little bit because the United States has been through a handful of recessions from the 1950s onward. So, first talk to us about how those have followed the same pattern.

[00:01:34]>> Yeah. So, typically um you know the the rule of thumb for judging recessions is two consecutive quarters of falling GDP.

[00:01:42]That's not like perfect. There's wiggle room. It it's up to a committee to decide. the National Bureau of Economic Research. Um, but generally if that's if you were going to say like, hey, we're heading into a recession, that's like the one indicator um, you can look at.

[00:02:00]There's been a couple like there was one in 2001 around the tech boom where we didn't quite have that, but they still called it a recession because they have a more holistic look at it. U, but that's it's sort of rare like that should happen in a recession. We usually don't see uh gross domestic product going up and we're saying, "Oh, the economy is bad." Like, it just it wouldn't naturally make sense.

[00:02:27]>> And then now you're saying something has changed. AI you're saying will change the way we can see what a recession actually looks like. Talk to us a little bit about that.

[00:02:39]>> Yeah. Yeah. So, I think there's two things here is one, you know, we have a chart in the story just laying out when recessions have happened since 1950. And if all you look at is the space between the shaded gray bars, and I I hope they're gray. I'm color blind, so hope that hope that's what it was. That's what I intended. Um, but if you just look at the spacing between them, typically we've had a recession every five to six years since 1950.

[00:03:05]What we've had since the great recession 2008 2010 span is you minus the little tiny minuscule barely happened COVID recession. Uh we've basically gone 16 years without one. So that predates AI.

[00:03:22]So there's something here where it's like either it's just an odd thing that happened. There's no reason it should happen every five to six years, but that's been the trend. We haven't had that for, you know, going on two decades now. So, something changed prior to AI and we can all guess what that could have been. It could have been that 2008, you know, was so horrific that it washed things from the system and gave us a longer time to run. We could say it's part of QE and money printing and just a flood of liquidity in the system that has, you know, propelled things. could be technological advancements preai, you know, a focus more on software, you know, technology stocks taking the lead in all of the indexes.

[00:04:10]Uh, but what I'm trying to say in this article is like there's another thing here that's quite obviously happening, which is AI uh coming into the picture and that could, you know, make this pattern that we've already seen, you know, extend it longer than it might might normally have gone.

[00:04:29]How are economists viewing this? Because I do want to quote you in your piece.

[00:04:33]You say this, "Economists may soon face a strange problem. Businesses grow, GDP rises, profits stay strong, but the jobs don't come along for the ride if AI allows companies to produce more with fewer workers. America could end up looking richer on paper while millions of households feel poorer in real life."

[00:04:52]How are economists viewing this moment right now?

[00:04:56]Yeah, my impression from talking to quite a few is that it's kind of the same split that you'll get talking, you know, talking with friends and family, you know, um you have some that basically kind of take the approach of like, hey, look, AI is new, but the idea of a new technology coming in and disrupting things and kind of changing the picture isn't new. And historically, we've seen this happen.

[00:05:25]and you have job losses at least initially but you gain them back somewhere else. It's just a reordering. These things don't happen simultaneously but it follows a natural progression.

[00:05:37]And then there's other people that are saying like no wait this really is a sea change. This is going to change things overall and we shouldn't trust historical patterns. So I think there's this internal debate right now of like I don't get the sense everyone anyone's like really overreacting to it. Um, but I think there is a healthy debate going on of like the doors at least open I think in minds that maybe it wouldn't have been before that like AI could really break that historical paradigm.

[00:06:11]You noted in your piece that before in past recessions like we talked about from the 50s to 2008 2009 there were those indicators like we said and the economy looked sick because the economy was sick. Now it's not looking sick but if you go to any person in America the majority of people don't feel good about the economy right it doesn't pass this vibe check. People feel pessimistic about the economy administration's handling of it. It's not unique to Trump. I cover mostly politics. And when President Biden was president, people didn't like the way he was handling the economy either. People feel really pessimistic about their financial outlook. People don't feel good about the way that their pocketbook looks now, how their wallet looks now, especially compared to years prior. So when you're thinking about vibes of the economy, how much do you think that's going to play a factor here?

[00:07:10]>> Yeah, it's an interesting question. I I mean, I think it could to some degree so long as it's substantiated, right? And so the idea that we have a K-shaped economy now, I think it's pretty well accepted. I mean that's particularly coming out of a and maybe going back into a high inflationary period where uh you know people's paychecks just aren't keeping up with rising cost. So I think so like so long as the vibes match some sort of realistic stat um it's going to factor in and and I think economists have been pointing to this. I mean it, you know, the term vibe session has become almost like a standard talking point even in academia. Um, but K-shaped economy is certainly I mean you can go to u the social um sciences research network SSRN do a topic check type in K-shaped economy and you're going to start getting papers um that talk about this phenomenon.

[00:08:10]>> You started your piece with a story about Ken Griffin. He is the founder and CEO of the hedge fund Citadel.

[00:08:18]Personally, he's worth, according to Forbes today, over $50 billion. Citadel manages over $60 million of assets. And he had a complete 180. You report from January on AI to this month in May on AI. Talk to us a little bit about that and why you thought that that was really important to put in your piece.

[00:08:42]Yeah. So, at Davos, he called AI's output garbage from what he saw. So, he obviously wasn't impressed by it, you could tell he was sort of, you know, um not buying the hype, and but just to use a word as strong as garbage. Um, and knowing that it's Citadel, that they have access to things that we don't have access to, that presumably he's seeing farther ahead than any of us, you know, normal people can see. I think that says something. The fact that he did a complete 180 within five months and basically seeing like oh my um this changes everything. This is now doing things that we had to hire PhDs for.

[00:09:23]I I started the piece with that because I don't think in our world there's a bigger tell. Um particularly like I said because he should be able to see and have access to things that I certainly don't have access to.

[00:09:36]And you said that he felt depressed about that by seeing AI's output this month and seeing how that that could really replace so many workers. I mean, if a billionaire who runs one of the most profitable hedge funds in the world is depressed. I mean, what does that mean for the rest of us? At what point do you think are there going to be enough AI layoffs for something to change, do you think?

[00:10:05]Yeah, I don't know. I mean, it I think the way these things always typically work is that there's warnings, there's warnings, there's warnings.

[00:10:13]People don't totally buy them and maybe for good reason. And it's not until, you know, impact um or a collision that people actually, you know, take it for for being real. Um so I honestly I don't know. I mean, I don't know what the sort of tipping point to make this real is going to be. I mean, I think people being skeptical about what the possible fallout is is certainly warranted. I mean, I I I don't think everyone should be buying this hook, line, and sinker that there's going to be this huge job replacement.

[00:10:47]And like I was really the struggle of writing this piece was not to be AI doomer. Um, but I mean, if you're asking me personally, like I think it's happening.

[00:10:58]I I I've I was skeptical. the more and more I see things, I I think it's an inevitability. Whether that actually leads to like largecale job displacement where these jobs don't get replaced, I don't know. I'm not I'm not that um cynical yet. Um but I think where we are now is a point where people should be taking this seriously and should be thinking about, okay, if this happens, then what what should I do? like at least be thinking ahead um to to you know what you can do to offset this if you think you're going to be kind of in that impact zone.

[00:11:38]I read your piece a few times obviously to prepare for this conversation and I didn't think you were AI doomer at all because you talked to multiple economists who had different points of view and one economist said that he thinks that there's still going to be that pattern where he saw this with his mom where her job at one point became obsolete due to advancements in technology. So then she had to adapt to a new job in a different industry. Based on your conversations with these types of experts, do you think that's where we're going to see everything going?

[00:12:11]Especially because like you and I are talking about, AI is going to totally redefine how we say and think about a recession. AI is going to redefine how a lot of different industries operate.

[00:12:25]>> Yeah. So I think that's the safest bet to rely on historical anal like I guess I would say it's the safest bet um in terms of going out on the wedge on your own right like whether it's going to be prove correct that it's going to follow that historical pattern I don't know but like if you were here and we were just playing a game and you know we were laying odds like you would naturally assume that history is going to you know if not repeat rhyme. Um but I think there's reason here for the first time you know and maybe everyone said this at every point you know in the industrial re revolution up until you know the internet boom in 2000 you know maybe people always did the same thing um that same conversation we're having now but to me this feels like it could be the one that actually does it I think it's at least you have to look at this as like it is a real possibility and and part of it is just um it's agnostic to the area right like to the subject matter in a sense like it's not just confined to oh it's a great for developing web pages like you can go and look that there's biomedical research happening advancing because of AI um I saw a story the other day about a a mathematical problem that was like given up on basically and some researchers with the help of AI think they've solved D it. So it's like it's doing things that like go beyond just a narrow scope and then it's this possibility of like you know okay you can look and you can say oh it's only going to apply to white collar type of work information type of work but we're already seeing advancements happening in robotics because of AI. So it's there is that touch point where it could enter the physical space where like the internet never you know it could enter the physical space in the sense of rerouting sales through Amazon as opposed to a big box store type of thing but you would still need people for that whereas this it's like I don't know if they could actually help develop robots that can replace people then the there's not going to be a slide in jobs there's you know you squeeze that balloon that error can't go to the other side if there's going to be a robot that can do something.

[00:14:48]>> I know that a lot of this conversation I've essentially been asking you to look in a crystal ball almost. But you reported in your piece that people didn't think stagflation would be real until it was real and then people said, "Oh, this could actually happen." So I am curious and I want to end on this final note that you say that this could be the end of recessions as we know them. In one year, in three years, in five years, how do you think economists are going to change that conversation around recessions, especially as we see these rapid developments with AI?

[00:15:25]Yeah, I think what's going to happen is, you know, like I said, NBER when they talk about recessions, they they're very clear. They say it's not just about economic growth, GDP, that they have these other factors.

[00:15:42]But I think what's going to happen is that there's going to be more of an emphasis on the other factors and a little bit less on GDP. GDP is still going to be the one that like you look there first and then you know if then if GDP is down then you look everything else whereas I think you know maybe by the end of the decade it's going to be okay we're going to look at these other things simultaneously with this and they're going to hold just as much weight um because I think at some point you know if jobs really do end up lagging because of this you're going to see economic activity probably start to fall just because people aren't going to have, you know, money to spend on things.

[00:16:26]>> Brandon, I really appreciate your reporting here, your outlook, and the conversation today. Thank you so much for joining me. I hope to have another one soon.

[00:16:34]>> Thank you.