The US economy could grow by more than 10% by 2034, driven by the boom in artificial intelligence, BNP Paribas economists wrote in a note to clients on Wednesday.
“The AI boom will be a period of optimism, in our view, in which the decisions of consumers, businesses and investors are informed by expectations of strong and sustained productivity growth,” the economists wrote.
How does AI boom compare to past revolutions?
How much could AI boost US GDP by 2034?
Why is the US better positioned than Europe for AI benefits?
What risks could derail BNP’s AI predictions?
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“Our central case is one of strong confidence, buoyant asset prices, and elevated consumption and investment growth,” they added.
While BNP Paribas expects major economies in the US, Europe, and the UK to all benefit from the advent of the technology, it views the US as best positioned to reap the largest benefits.
Read more: What is GDP, and why is it important to economists and investors?
US gross domestic product (GDP) is likely to grow by 6.7% by 2034 under the bank’s central scenario, while the bank expects GDP growth across the US, UK, and Europe in the same period to average 4% above the baseline.
“These results broadly match the historical experience of the [information and communications technology] revolution, when the US pulled ahead of Europe,” the economists wrote.
The AI boom may also offset other market shocks.
“The results are clear: without AI, the trajectory of growth in major economies would look significantly worse over the next 10 years,” the economists wrote. “In a few instances, the AI shock is large enough to more than offset headwinds facing major economies.”
Read more: How to protect your portfolio from an AI bubble
Even so, BNP Paribas economists acknowledged their view could break down on several fronts, including due to “irrational exuberance” akin to earlier technological booms that could burst a market bubble, central bank errors in setting interest rate policy, and a marked increase in unemployment should AI move faster than the labor market can keep up.
That said, the development of AI is likely to be far more positive than negative, the economists wrote.
Looking to historical parallels for evidence, they noted that the AI boom is likely to create demand strong enough to “support reemployment even if the AI shock disrupts entire occupations or industries” and that the technology’s development should have only a limited impact on rates policy.
“AI may not quite match Adams’s ‘infinite improbability drive’ for universe-changing power,” BNP’s economists wrote, “but its potential deep productivity effects lean us towards the advice prominently displayed on the Hitchhiker’s Guide: ‘Don’t panic.'”
https://finance.yahoo.com/news/an-ai-economic-boom-may-be-underway-and-economists-say-the-us-is-best-positioned-to-benefit-182949936.html
