{"id":411667,"date":"2025-09-09T23:32:13","date_gmt":"2025-09-09T23:32:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/411667\/"},"modified":"2025-09-09T23:32:13","modified_gmt":"2025-09-09T23:32:13","slug":"worried-about-the-economy-here-are-4-reasons-to-be-optimistic","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/411667\/","title":{"rendered":"Worried About the Economy? Here are 4 Reasons to Be Optimistic"},"content":{"rendered":"

Some economists are depressed by job market weakness and tariff jitters. But one\u00a0thinks that the coming boom in artificial intelligence<\/a> could energize the economy just as it’s starting to lose momentum.\u00a0\n<\/p>\n

\u201cI believe tailwinds from AI will continue to drive investments and fill cracks in the U.S. economy,\u201d Capital Group Economist Jared Franz wrote in a recent note.\n<\/p>\n

While he acknowledged that there are reasons to worry about the economy<\/a>, Franz laid out four signals that indicate the U.S. economy could stay resilient in the coming months.<\/p>\n

AI Spending is Booming <\/p>\n

Tech companies have spent hundreds of billions of dollars building out AI infrastructure, especially data centers.\n<\/p>\n

Spending on AI could help keep the economy humming, even if it raises worries about a \u201cbubble\u201d like the one that ended the 1990s dot-com boom<\/a>. But while an \u201cAI winter\u201d may still be on the horizon, it won\u2019t be the kind of meltdown that followed the massive spending on Internet infrastructure more than two decades ago, Franz wrote.\u00a0\n<\/p>\n

\u201cUnlike the dot-com bubble, today\u2019s companies are flush with cash and have robust earnings,\u201d Franz wrote.\u00a0\u00a0\n<\/p>\n

Labor Markets Are Evolving <\/p>\n

Between 1970 and 2015, the personal computer and the Internet were responsible for eliminating 3.5 million jobs in careers like typing, bookkeeping, and auditing. But over that same time period, computer technologies created 19.3 million new jobs, Franz said, citing a McKinsey & Company report.\n<\/p>\n

\u201cAI is likely no different, and we are witnessing some AI-related job displacement,\u201d Franz said.\u00a0\n<\/p>\n

This restructuring is starting in the tech sector, Franz wrote, noting that many of the recent layoffs have occurred at companies that overhired during the pandemic. Now that they\u2019re spending more to bring in AI talent, many tech firms are letting go of other employees as they seek to preserve their profit margins.\u00a0\n<\/p>\n

\u201cIt\u2019s no coincidence layoffs are concentrated in tech companies heavily investing in AI,\u201d Franz said.\u00a0\n<\/p>\n

However, this shift in the labor market isn\u2019t likely to drive up unemployment.\n<\/p>\n

\u201cThe next few months could shed more light on the trajectory of job markets, but for now, I don\u2019t see evidence of widespread pain,\u201d Franz said.\n<\/p>\n

Productivity is Improving <\/p>\n

Even as inflation remains elevated and the unemployment rate ticks higher, American workers are getting more done per hour of work. Worker output per hour rose at an annual rate of 2.4%<\/a> in the 2025 second quarter, bouncing back from a downturn in the first quarter.\n<\/p>\n

And thanks to AI, productivity could continue to improve, Franz wrote. He projected that productivity could rise at an annual rate of 4% over the next five years, well over the historical average of around 2%.\u00a0\n<\/p>\n

\u201cAI may have already ushered in a new era of exceptional productivity,\u201d Franz wrote. \u201cThis increase is constructive for GDP and may even help moderate inflation.\u201d\n<\/p>\n

Corporate Earnings, Consumer Spending Remain Healthy <\/p>\n

Even as he sees the optimistic side of the economy, Franz acknowledges that there are real concerns about economic growth.\n<\/p>\n

Persistently high inflation<\/a>, weak job creation<\/a> and a weakening gross domestic product (GDP) are part of this trend, which could get worse as the full effects of President Donald Trump\u2019s tariffs begin to kick in<\/a>.\u00a0\n<\/p>\n

But Franz said that recent economic weakness was more likely the result of economic cycles<\/a>, rather than a signal that an economic slowdown is coming.\u00a0\n<\/p>\n

\u201cCompany earnings have also generally held up, with some reporting healthy consumer spending, particularly among higher-income customers,\u201d Franz said.\n<\/p>\n

He said the expected interest rate cuts<\/a> from the Federal Reserve could also help \u201csteer the economy out of a rough patch.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Some economists are depressed by job market weakness and tariff jitters. But one\u00a0thinks that the coming boom in…\n","protected":false},"author":2,"featured_media":411668,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,16,15],"class_list":{"0":"post-411667","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115176953949073010","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/411667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=411667"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/411667\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/411668"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=411667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=411667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=411667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}