Impact of AI on the Economy

The modern economy is more information-oriented and less capital-intensive, with growth shifting from heavy industry to ideas. Interest rates may have fallen due to reduced need for capital in new firms. However, with the potential power of AI, there could be a surge in physical investment and demand for capital if AI enables the cheap production of goods, leading to environmental cleanups and improved living standards. Predictions often underestimate the impact of technological revolutions in accelerating economic growth, as seen with the example of the commercial aviation industry plateauing after the 1970s, which was somewhat offset by the computer revolution.