Economists Forecast $200B In AI Investment In The Next Couple Years

By TND
Posted on 08/08/23 | News Source: FOX45

 Goldman Sachs economists expect the economic impact of artificial intelligence to rival previous big technological advances, such as the electric motor and personal computer.

Investments in AI could reach around $200 billion globally by 2025, they said.

The U.S. is positioned as the market leader. They estimate AI investment could reach $100 billion in the U.S. alone.

And they think the economic benefits of AI will outweigh the downside.“While some worker displacement will likely occur as tasks are automated, worker displacement from automation has historically been offset by creation of new jobs, and technology-driven creation of new occupations actually accounts for the vast majority of long-run employment growth,” Goldman Sachs economist Joseph Briggs said via email.


Briggs said they expect “AI will lead to a large productivity boost” for workers. He pegged that increase at 1.5 percentage points a year in the decade following widespread usage.

Widespread AI adoption could eventually drive a 7%, or almost $7 trillion, increase in annual global gross domestic product over a 10-year period, Briggs noted in a report last month on generative AI’s impacts.

Businesses will need to make significant upfront investments, Briggs said.

They expect the bulk of investments will be focused on hardware needs to train and query AI models.

Over time, they expect AI software investment will increase with adoption and could ultimately exceed hardware investment.

The AI adoption timeline is highly uncertain, but it might be more frontloaded than prior technology booms, he said.

He noted in the Goldman Sachs report that the “burst in productivity due to the electric motor and personal computer, for example, occurred around 20 years after the key technological breakthrough.”

That’s when about half of U.S. businesses had adopted those technologies, he said.

Briggs said their analysis of recent business surveys suggests that the investment and productivity booms from generative AI will probably be somewhat delayed and start showing up in aggregate data sometime in the second half of the decade.

Goldman Sachs noted a surge in investor interest since last fall’s launch of OpenAI’s ChatGPT.

But there’s still a way to go before widespread adoption.

They noted a 2021 survey that showed only 4% of American companies reported using AI in their business processes.

Briggs said the big boost in labor productivity will hinge on the difficulty level of AI tasks, how many jobs are automated and the speed of adoption.

“People adapt, the workforce adapts,” Anton Dahbura, co-director of the Johns Hopkins Institute for Assured Autonomy, said recently.

Dahbura, like Briggs, expects more good than bad to come of AI for America’s workforce.

“It's a net improvement,” Dahbura said. “And as always, there's an opportunity, an extra bonus, for people who really see what's happening and are willing to make the adjustment in their own career planning, training and so forth.”

The Pew Research Center looked at AI’s impact on the workforce, breaking down which types of tasks and skills could either be replaced by AI or helped the most by this fast-evolving technology.

The Pew Research Center determined about a fifth of workers are in jobs that are highly exposed to AI.

Workers with more education and higher earnings are more exposed to AI. Analytical skills are more important in jobs with more exposure to AI, according to the Pew Research Center. Those include the areas of critical thinking, writing, science and mathematics.

But Dahbura didn’t think white-collar workers would face the biggest threat.

He said there could be more of an impact on blue-collar workers, “not unlike previous waves of technology that have come along.”

Dahbura expected AI will take away some jobs while improving others. And he said skills and flexibility will pay off in this shifting workforce.

Briggs said 60% of today’s jobs didn’t exist in 1940.

He said they expect most displaced workers will eventually find new jobs that stem from AI adoption or as a result of the anticipated productivity boost ushered in by AI.

Another recent Pew Research Center survey found about six-in-10 Americans believe AI will have a major impact on workers generally, but only 28% believe it will have a major effect on them personally.

Dahbura said the best results will come from marrying human expertise with AI power to achieve what each can’t individually.

“You have to have a human in the appropriate place in the loop,” Dahbura said.