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Harvard economist Jason Furman told Axios that if he were to return to his old job as chairman of the White House Council of Economic Advisers today, he would rely on AI tools over staff economists for much of the council's day-to-day analytical work. The big picture: Unsurprisingly, this made some waves in the online discourse, particularly the loose-knit community formerly known as Econ Twitter. Many veterans of the economic policy trenches see real risks in future policymakers becoming overly reliant on AI — or at a minimum think that Furman is underestimating the importance of human economists in advising the nation's leaders. What they're saying: "CEA work, at least in my experience, is highly bespoke as you're explaining the data flow (and much else) to very busy people who don't want only market-shop analysis," Jared Bernstein, the CEA chair under President Biden, wrote on Substack . "Yes, they want and need that — what will the markets make of this CPI, jobs, GDP, etc. report — but more so they want to know how this report fits into our narrative, our agenda, the president's trip today to Iowa." He adds that within a White House, "the human skill of reading-the-room is paramount. I'm far from an AI expert, but my sense is it sucks at that and probably always will, a conclusion that derives in no small part from listening to its creators!" Zoom in: Claudia Sahm, a former Federal Reserve economist, raised an issue that we've often heard from senior people in fields like consulting and investment banking: If you get rid of junior positions, where will future senior leaders come from? Furman's staff "went on to found the Yale Budget Lab, run Treasury economic policy and a Fed institute, serve in later [administrations], and publish research on trade, environment, and taxes. That's what '20 staff' become," she wrote on X . "No model does that." Bloomberg chief U.S. economist Anna Wong argues that the "ability to now not depend on anyone, as a senior person, is very, very empowering. Now, with just the idea, a senior person can go far." Zoom out: "Entering into sci fi speculation," Wong wrote on X , "as humans [we're] not about to replace the aging experts due to low pipeline of young human experts, AI themselves, through the training over the years, became the one spawning the ideas." "That seems like a disaster waiting to happen that current social policy needs to address." Yes, but: Casey Mulligan, who served in President Trump's first-term CEA and now as chief economist at the Department of Health and Human Services, said that the implications of AI for human labor in policymaking are not so obvious. "I built AI tools at two federal offices," Mulligan wrote on X . "Able to do economic research better and more quickly, we needed more economists rather than fewer due to the added demand for what we do. This pattern is also evident in the small business sector." This concept — that labor-saving tools can actually increase demand for labor — is known as Jevons Paradox . The bottom line: "Be the labor-augmenting technological change you want to see in the world," wrote Stanford economist Neale Mahoney. "It's on us olders to build organizations where people and AI complement each other, and to prepare the youngers for a world with better and better AI," he adds.

Ahead of the US midterm elections on Nov. 3, national polls show that most Americans are deeply dissatisfied with the direction of the country.

Eye-opening revelations this past week have solidified my personal fears about the year ahead: As a nation and as a globe, we're facing a record number of wild risks that are way outside our control. My growing hunch about this scenario has been bolstered by daily conversations with CEOs, government insiders and top investors. Why it matters: It feels likely — not certain — that between now and 2028, we'll face society-level disruptions, possibly including cyberattacks and fast-twitch economic shocks. What we're facing: We've navigated single-shot crises like the financial meltdown of 2008 and the pandemic of 2020. This next year will be different. The real risk is a chain reaction: One shock sets off others — faster than we can process, and caused by AI dynamics we don't fully understand. Call it chain-reaction chaos . And that's against the backdrop of this age of post-processable velocity : The speed of change exceeds the ability of any individual, company, market or government to fully absorb, understand and respond. The reason this scenario looks so likely is that so many obvious risks, all with relatively high probabilities, keep piling up. Any one of them will rock already highly volatile markets and politics: Cyber chaos. This past week was a big flashing siren. AI-detected flaws in PHP, the code behind millions of websites, knocked government sites offline worldwide and prompted the National Security Agency to warn organizations to patch immediately or go dark. Major banks found unauthorized AI agents inside customer accounts, some trying to take actions customers never asked for. And Anthropic's deputy chief information security officer, Jason Clinton , warned that as bad as the past several days had been, cyber threats will get "a lot worse before they get better." Salesforce CEO Marc Benioff quickly agreed , writing on X: "Code red." As Madison Mills reported for Axios , the AI companies and the banks are scrambling for "day after" planning, fully anticipating a bigger cyber hit in coming months. People at top AI companies tell me the chances are far north of 50%. AI bubble bursts (partially). This doesn't feel like 1999, since giant companies with huge balance sheets are underwriting the AI boom. But that's also the problem. They're increasingly doing it with borrowed money: Goldman Sachs expects about a third of Big Tech's AI capital expenditure to be debt-financed this year. A bubble doesn't need to burst spectacularly to cause widespread economic and political pain. These companies are deeply intertwined, investing in, selling to and buying from each other. Look what happened with Meta this past week: It crushed its earnings , but then spooked the market by detailing the difficulties of raising capital to fund AI. Any sign of overbuilding … or companies underusing AI … or China catching up … or AI prices collapsing … or credit costs spiking … or the political backlash intensifying, and markets could tumble fast. A sharp correction feels like a 50%+ scenario in the short term. AI hits true RSI. AI could get better, faster than almost anyone anticipates via recursive self-improvement (RSI). People inside Anthropic, OpenAI and Google see this unfolding now. This could be awesome long-term if we steer the technology smartly. But it could also prove wildly disruptive in 2027: More advanced AI would pose a more urgent threat to industries, companies and jobs. You could easily see this enticing Democrats to join Sen. Bernie Sanders (I-Vt.) in demanding a slowdown or full pause, which would rattle markets. War expands, oil spikes. President Trump's aides believe he's likely to resume the Iran war postelection. The Iranians warn they would expand their targets in retaliation. The U.S. reduced staffing at embassies throughout the Middle East amid increased threats . Escalation feels more likely than not at the very moment oil supplies are tight and gas and diesel prices are very high. Imagine the economic pain of sustained $120-a-barrel oil. An aging, unrestrained president. I want to be clear here: This isn't a political statement or Trump health appraisal. I'd write the same for Joe Biden. It's a simple, fact-based observation based on actuarial tables. Trump, age 80, heads into the next two years as the oldest person ever to be president. It's a medical certainty that the chances of mental decline and incapacitation rise dramatically in your 80s. Trump is much like Biden in that he doesn't have people around him who can level with him. The risk stretches from health episodes to judgments about war and the limits of presidential power. What you can do: I spell this out not to scare you or cause you to throw up your hands and retreat from reality. You can only make wise decisions for your career, your life and your family if you're living in the future — understanding what's coming, and living these historic times with your head in the game. The expert journalists of Axios are working hour by hour to be your clinical, useful guide to this head-spinning era. Three very practical steps: Be aware: This is an exciting time to be alive. So learn about AI — the good, bad and ugly. And think more deeply about what you expect from your employer and elected representatives. Be vigilant: This past week's Axios reporting about AI agents showed the importance of locking down your passwords. Put every account in a secure password manager with a unique password. Use passkeys where offered. Protect your email and phone with an authenticator app, since whoever controls those can reset everything else. And don't hand a password or login code to anyone who contacts you, human or AI agent. Be ready: This past week also showed how AI is the market. So if you have a 401(k) or other investments, make sure to understand how concentrated you are in different sectors. Seek out smart diversification strategies. And find a few news sources, like Axios, that you can trust to make sense of all the craziness. The bottom line: It's easy to argue any one of these risks won't materialize. But when you add up this many, the overall chance of a crisis outside our direct control is spiking by the day.

Article URL: https://twitter.com/boneGPT/status/2114035719853265264 Comments URL: https://news.ycombinator.com/item?id=50230995 Points: 20 # Comments: 10

Some of the world's leading financiers are sounding increasingly alarmed about an AI bubble.

Article URL: https://www.apollo.com/wealth/insights-news/insights/daily-spark/no-signs-of-ai-payoff-outside-the-tech-sector Comments URL: https://news.ycombinator.com/item?id=50224463 Points: 233 # Comments: 194

With the U.S. midterm elections looming, Americans are nearly as gloomy about the economy as they were when the nation was emerging from the pandemic.

U.S. Treasury yields edged higher on Friday following a sharp reversal on Thursday.

An old idea springs anew as a chorus of influential voices predicts that AI may trigger crises of vast magnitude In a preface to his book Capitalism and Freedom, the American economist Milton Friedman famously observed that a crisis can propel once-fringe ideas into the political mainstream. “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around,” he wrote. The job of intellectuals, thinktanks and economists, he argued, is to refine the quality of these ambient ideas, so that good ones are ready when disaster strikes. Continue reading...

Allison Schrager, Bloomberg Opinion columnist, says AI could lead to sustained economic growth, possibly for the next 100 years. She speaks during a Bloomberg Opinion event held exclusively for Bloomberg.com subscribers in New York. (Source: Bloomberg)

Citadel founder and CEO Ken Griffin discusses the benefits and risks of artificial intelligence. Speaking with Bloomberg's Dani Burger at Citadel's annual Future of Global Markets Conference in New York, Griffin also comments on the midterm elections, the US economy and fiscal policy. (Source: Bloomberg)

The aerospace and AI company posted $14.6 billion in revenue, up 161% year-over-year.

Research on past recessions suggests downturns can accelerate automation. That raises the specter of a double whammy for workers.