The writer is director of Stanford University’s Digital Economy Lab and co-founder of Workhelix
For over a decade, economists have grappled with a modern iteration of the Solow Paradox: we have seen artificial intelligence everywhere except in the productivity statistics. Sceptics argue that the reason for this is that modern innovation in machine learning systems and now generative AI pale in comparison to the great inventions of the past. However, the latest benchmark revisions from the Bureau of Labor Statistics suggest the statistical fog may finally be lifting.
Data released this week offers a striking corrective to the narrative that AI has yet to have an impact on the US economy as a whole. While initial reports suggested a year of steady labour expansion in the US, the new figures reveal that total payroll growth was revised downward by approximately 403,000 jobs. Crucially, this downward revision occurred while real GDP remained robust, including a 3.7 per cent growth rate in the fourth quarter. This decoupling — maintaining high output with significantly lower labour input — is the hallmark of productivity growth.