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I kind of want to write about AI every day these days, but I’ve got to pace myself so you all don’t get overloaded. So here’s a roundup post with only one entry about AI. Just one, I promise!
Well, OK, there’s also a podcast episode about AI. I went on the truly excellent Justified Posteriors podcast to talk about the economics of AI with Andrey Fradkin and Seth Benzell. It was truly a joy to do a podcast with people who know economics at a deep level!
Anyway, on to this week’s roundup.
1. Did AI cause a productivity boom in 2025? We don’t know.
Erik Brynjolfsson believes that AI caused a productivity boom last year:
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…[N]ew figures reveal that total payroll growth [in 2025] 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…My own updated analysis suggests a US productivity increase of roughly 2.7 per cent for 2025. This is a near doubling from the sluggish 1.4 per cent annual average that characterised the past decade…
Micro-level evidence further supports this structural shift. In our work on the employment effects of AI last year, Bharat Chandar, Ruyu Chen and I identified a cooling in entry-level hiring within AI-exposed sectors, where recruitment for junior roles declined by roughly 16 per cent while those who used AI to augment skills saw growing employment. This suggests companies are beginning to use AI for some codified, entry-level tasks.
But Martha Gimbel says not so fast:
There are three reasons why what we are seeing may not actually be a real jump in productivity—or an irreconcilable gap between economic growth and job growth…
First, productivity is noisy data…We shouldn’t overreact to one or even two quarters of data. Looking over several quarters, we can see that productivity growth has averaged about 2.2%. That is strong, but not unusually so…
Second…for GDP growth in 2025, we’re still waiting for [revisions to come in]. Note that any comparison of jobs data and GDP data for 2025 is comparing revised jobs data to unrevised and incomplete GDP data…
Third…GDP data has been weird in 2025 partly because of policy and behavioral swings around trade. If you look at job growth relative to private-domestic final purchases…[job growth] is still low, but not as low as it is relative to the GDP data…
[E]ven if you trust the productivity data…there are other explanations besides AI…One reason job growth in 2025 was so low was because of changes in immigration policy. If the people being removed from the labor force were lower productivity workers, that will show up as an increase in productivity even though the productivity of the workers who remain behind has not changed…
Second, if you look at the productivity data, it appears that much of the boost is coming from capital utilization due to increased productive investment…[A]t this point it is people investing in AI not people becoming more productive by using AI.
Meanwhile, in January, Alex Imas had a very good post about AI and productivity:
Alex gathers a bunch of studies showing that AI impr