As inflation continues to be a persistent problem, with rates remaining higher than desired despite the Federal Reserve’s efforts to raise interest rates, economists are suggesting that we may be entering a new era of elevated inflation driven by various global factors.
From onshoring initiatives to trade tensions with China, the transition to green energy, and an aging population pushing up healthcare costs, society is in dire need of alternative solutions to combat rising expenses.
Technology’s Proven Track Record
As we still fight with the challenges of a rapidly evolving global economy, it’s important to remember that technology has served as a disinflationary force in the past.
The microchip, for example, has been a stellar example of how innovation can drive down costs and increase efficiency.
Now, as we face a new set of inflationary pressures, AI emerges as a potential savior, offering a powerful counterweight to the rising costs that threaten our economic stability.
AI’s Productivity Boost
One of the key ways in which AI can help combat inflation is by driving productivity gains. As McKinsey predicts, AI could add a staggering $4.4 trillion in corporate profits annually, while Nielsen estimates that GenAI could boost labor productivity by an impressive 66%.
These gains will be particularly pronounced in industries that have already achieved a high level of digitization, such as retail, technology, media, and professional services.
By removing heavy cognitive workloads and allowing humans to work smarter and more efficiently, AI is poised to revolutionize the way we do business.
As our industry has demonstrated over the past decade, AI can provide seamless end-to-end efficiencies in supply chain and logistics, help manage networks more effectively through automation, and even assist in customer service by enabling personalized interactions and fine-tuned service offers.
A Blessing for Struggling Sectors
Perhaps most excitingly, the use of new AI technologies seems to be causing a strong deflationary effect on the global economy, bringing much-needed relief to struggling sectors. As we witness the transformative power of AI in industries such as healthcare, real estate, and investing, it becomes clear that this technology has the potential to be a game-changer in the fight against inflation.
From accelerating response times to property listing inquiries in real estate to opening new research paths for improved analytics in investing,
AI is driving efficiencies and productivity gains that will be crucial in maintaining a low-inflation environment for the next 20 to 30 years. It’s a blessing that we, as a society, cannot afford to overlook.
Bridging the Gap Between Technology and Adoption
Of course, realizing the full potential of AI as a disinflationary force will not happen overnight. As with any transformative technology, there is a significant gap between the sophistication of the tools available and their widespread adoption.
Just as electric cars have been around since the 1800s but are only now entering the mass market, AI will require time and effort to fully integrate into our economic and social systems.
Building the Necessary Infrastructure
One of the key challenges in harnessing the power of AI lies in building the necessary infrastructure to support its implementation.
Most of AI’s value sits in specialized data sets in vertical models that either don’t exist today or are still being built, and creating a single platform that is both privacy-safe and data-intelligent is no small feat.
However, as more companies embark on their AI journey and invest in the development of these crucial data sets and models, we can expect to see a gradual but steady increase in the adoption of AI across various industries. Those that start now will be well-positioned to reap the benefits of increased productivity and efficiency in the years to come.
Embracing the Future
It’s important to approach the challenges and opportunities presented by AI with a sense of optimism and determination.
While there is much work to be done in terms of building the necessary infrastructure and bridging the gap between technology and adoption, the potential benefits of AI as a disinflationary force are too significant to ignore.
By embracing this transformative technology and working together to harness its power for the greater good, we can create a future in which rising costs are no longer a constant threat to our economic stability and well-being.
It’s a future that we, as a society, must strive towards with all the ingenuity, creativity, and determination that we can muster.
Final Words
As inflationary shocks are becoming the new normal, AI emerges as an unexpected but potentially game-changing solution.
By driving productivity gains, increasing efficiency, and bringing much-needed relief to struggling sectors, this transformative technology has the power to serve as a disinflationary counterweight to the rising costs that threaten our economic stability.
It’s important that we approach this technology with a sense of optimism and determination. While there is much work to be done in terms of building the necessary infrastructure and bridging the gap between technology and adoption, the potential benefits of AI as a disinflationary force are too significant to ignore.
By embracing this transformative technology and working together to harness its power for the greater good, we can create a future in which rising costs are no longer a constant threat to our economic stability and well-being.
It’s a future that we, as a society, must strive towards with all the ingenuity, creativity, and determination that we can muster.
