Truth and Consequences Over the AI Boom

Let’s put aside the hype — the AI boom will further reduce labor demand. The overall growth picture isn’t what it seems from the headline numbers alone.

Key Takeaways:

• GDP growth has been skewed by AI data center spending, import declines, and the drawdown in the personal savings rate from the equity wealth effect (the largest factor)

• Broader measures of income or growth are stagnating

• The AI effect is coming from productivity, but that’s primarily manifesting as

  lower demand for labor — a disinflationary effect

• All of this means we’ve entered a dangerous and volatile phase for equities. Best to limit your exposure to high beta names, avoid concentration, and look at hedging strategies to limit downside risks