Artificial Intelligence: Implications for Growth, Jobs & Productivity
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It has been argued that AI could usher in "10x of the Industrial Revolution at 10x the speed." Yet, for AI to deliver on its growth potential for the economy, not just for a select group of companies, it needs to create jobs, lots of them- to generate worker income and spur consumption growth. So far, the records for growth, jobs, and productivity are unimpressive; however, to be fair, they are far from the final scorecard.
In the first half of 2026, even with double-digit annualized gains in business spending on technology equipment and intellectual property (AI), the economy saw an annual growth rate of 1.75%, with real consumer spending rising by 1.8%, the creation of 450,000 payroll jobs, and productivity growth of about 1%. Various factors impacted that growth and job performance, with AI emerging as the most significant influence.
AI is reportedly already managing or assisting with large volumes of white-collar tasks, allowing some companies to reduce their headcount. But the future impact could be more significant in scale and breadth. AI is designed to perform tasks traditionally done by humans, whereas the Industrial Revolution was a massive job creator.
Predicting the impact of AI on the total number of employed individuals is challenging. Nonetheless, if AI enables companies to downsize their workforce or eliminates the necessity to expand it, this could significantly harm overall economic performance.
This isn't a pessimistic view; it's simply basic arithmetic. Real consumer spending accounts for 70% of overall GDP growth (add another 3% for housing), while all types of business investment spending are less than 15%. If real consumer spending decreases by 100 basis points due to sluggish job growth, investments in AI models and infrastructure would need to increase by 3X or 4X above the current rate to maintain the same GDP growth rate.
Is it possible? A surge in AI investment of this magnitude would far exceed most companies' current cash flows, requiring unprecedented borrowing from the private sector. Yet, then the real question with AI is whether such an investment is essential, considering AI might impede the growth of its main market, the consumer, due to stagnant job growth.
It's crucial to find a balance where AI enhances GDP output and productivity without adversely affecting the job market to the point where consumer spending significantly decreases. However, it's uncertain where such a trade-off exists.
These issues will not be settled today, next month, or even next year. Historically, infrastructure booms and new technologies take years before their economic and financial benefits become evident. Nonetheless, all past innovations have ultimately created more jobs than they eliminated. For AI to be truly successful, it must create more jobs than it removes, and the responsibility to prove this lies with AI.
Joseph G. Carson
AuthorMore in Author Profile »Joseph G. Carson, Former Director of Global Economic Research, Alliance Bernstein. Joseph G. Carson joined Alliance Bernstein in 2001. He oversaw the Economic Analysis team for Alliance Bernstein Fixed Income and has primary responsibility for the economic and interest-rate analysis of the US. Previously, Carson was chief economist of the Americas for UBS Warburg, where he was primarily responsible for forecasting the US economy and interest rates. From 1996 to 1999, he was chief US economist at Deutsche Bank. While there, Carson was named to the Institutional Investor All-Star Team for Fixed Income and ranked as one of Best Analysts and Economists by The Global Investor Fixed Income Survey. He began his professional career in 1977 as a staff economist for the chief economist’s office in the US Department of Commerce, where he was designated the department’s representative at the Council on Wage and Price Stability during President Carter’s voluntary wage and price guidelines program. In 1979, Carson joined General Motors as an analyst. He held a variety of roles at GM, including chief forecaster for North America and chief analyst in charge of production recommendations for the Truck Group. From 1981 to 1986, Carson served as vice president and senior economist for the Capital Markets Economics Group at Merrill Lynch. In 1986, he joined Chemical Bank; he later became its chief economist. From 1992 to 1996, Carson served as chief economist at Dean Witter, where he sat on the investment-policy and stock-selection committees. He received his BA and MA from Youngstown State University and did his PhD coursework at George Washington University. Honorary Doctorate Degree, Business Administration Youngstown State University 2016. Location: New York.