I am referring to what has been called the fourth industrial revolution—the increasing use of artificial intelligence (AI), machine learning and big data throughout our economy. However, judging from past experience, these productivity gains could be slow to arrive. Computers went into widespread use during the 1980s, but a surge in productivity growth did not emerge until the period from 1995 to 2005.
I delivered a paper about this a few weeks ago at a conference hosted by the Federal Reserve Bank of San Francisco. Besides, the near-term risks around productivity growth are tilted to the downside. This is because trade conflicts, and the emergence of nationalist or populist policies more generally, threaten to reverse some of the prior productivity gains made through globalization.