Economists are divided on the extent to which artificial intelligence will prove disinflationary—and when. On the one hand, AI capital expenditure (capex) is driving massive demand for finite resources and skills, thereby pushing up prices. On the other, AI’s productivity benefits could increase efficiency, bringing down costs in the longer term.
Jeremy Siegel, an emeritus professor of finance at the Wharton School of the University of Pennsylvania, has a further theory: AI could help address the affordability crisis through agents tasked with making consumers’ lives cheaper.
While AI and data centers aren’t hugely popular at present, any assistance in bringing down the cost of living is likely to be welcomed. Currently, U.S. consumers face inflation levels of 3.4%, according to the latest data from the Bureau of Labor Statistics. That is significantly ahead of the Federal Reserve’s 2% target, and it hiked the U.S. base interest rate this month as a result.
Affordability is also top of mind for voters in the run-up to midterms: A July study from Pew Research showed the economy was the most important issue for voters, with 29% saying they wanted to hear plans to address price increases from congressional candidates. A further 15% said affordability and the cost of living specifically were key issues for them.
