AI’s impact on the economy

Artificial intelligence (AI) investments have had an outsized impact on the economy says Curt Long, vice president of data and research and chief economist for America's Credit Unions, in the latest Economic Update.

"Certainly, the stock market is benefiting from the extraordinary performance of a few key tech companies. There's an adage that the stock market is not the economy. But in this case, it might be." Investments in AI have outpaced the rest of non-housing corporate investments. Excluding AI investments, non-housing capital expenditure growth would be below zero.

AI adoption

U.S. companies have been adopting AI at increasing rates over the past year. However, these numbers have plateaued over the past couple of months. Nine percent of companies have adopted AI to produce goods and services, while 14% plan on doing so in the next six months.

In the financial sector, this trend of adoption is similar but elevated. Around 15% of financial sector firms are using AI today. Sixty-six percent of credit unions now plan to leverage AI for credit decisioning, representing a dramatic evolution from basic automation to intelligent decision-making platforms that better serve member needs.

Labor market concerns

Unemployment has been on the rise this year, with the most recent estimate being 4.3%. It's worth noting that the September jobs report has been delayed due to the government shutdown.

The U.S. government is the largest employer in the U.S. Layoffs at the federal government and slow hiring rates have impacted the labor market, and young workers the most. Data from the Bureau of Labor Statistics shows that 9.2% of workers aged 20 to 24 are unemployed. Adoption of AI has reduced the employment of young workers in the most AI-exposed occupations by 13% according to a Stanford study. This especially impacts lending services, which are in the top 10 AI-exposed industries, as well as potentially impacting credit union teller jobs.

Additionally, hiring rates are the lowest since 2013, and the finance sector is hiring less than the overall economy.

While AI adoption has grown significantly in the last couple of months, there's still a lot to be determined about its long-term impact on the economy.

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