The Myth of Productivity, Again

The launch of ChatGPT in October 2022 ended the pandemic-era bear market in stocks. The AI story has been the predominant narrative for three years now. The indexes on Wall Street are at historic highs, surpassing 2000, 1968, 1929… the last three tech-inspired bubbles.

But ChatGPT did something else. It brought the idea of “productivity gains” back into the economic conversation. Look at this chart:

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Since the launch of ChatGPT, job openings in the U.S. have sunk. More of a return to trend after pandemic-era dislocations warped the hiring data. (Source: @infraa via X)

Many economists will interpret the introduction of AI tools in the workplace as a substitute for workers. And it’s true, almost immediately upon the introduction of Chat GPT, the stock market started to boom and job openings dropped.

It’s unlikely that AI tools, like ChatGPT, Perplexity or Claude, increased productivity overnight. But even the perception that they could, gives hiring managers a pause on posting new job openings. Maybe.

The more likely explanation is that the Federal Reserve began hiking interest rates to combat 9% inflation in 2022. Inflation alone gave employers a reason to be cautious when taking on full-time salaried employees.

Employment data trends were further complicated early in 2022 and 2023 because the Biden era statistics emphasize government-created jobs and part-time work… if even those stats don’t get revised away in the coming months.

Will AI ultimately lead to fewer jobs and shorter workweeks? When asked that question on Fox News’ Claman Countdown yesterday, Nvidia CEO Jensen Huang looked puzzled.

“No,” he responded. “These tools are so powerful and efficient, we’ll be busier than ever.”

In innovation cycles of the past, new efficiencies generally create jobs – yes, different jobs, new skills – but more of them.

~ Addison

P.S. Part of yesterday’s Grey Swan Live! with Mark Jeftovic covered some of this ground. Mark even made the bold claim that the internet could have gone away following the dotcom boom and the economy would have been fine – but that wouldn’t be the case with AI today.

The comment drew immediate discussion on the Live! chat board. Jeftovic also claimed the stock market has become so big, so fast, we won’t see a 2008-style collapse ever again… because if we did, that would be “the end” of our financial system.

Provocative stuff.

The fireworks continued when Mark and Andrew argued that, because of a new regulatory environment established by the Trump administration and now going into law, there is a significant possibility for a parabolic move in crypto by year-end, with an emphasis on several stocks that should benefit, no matter which specific cryptocurrencies take off.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

But ChatGPT did something else. It brought the idea of “productivity gains” back into the economic conversation. Look at this chart:

Turn Your Images On

Since the launch of ChatGPT, job openings in the U.S. have sunk. More of a return to trend after pandemic-era dislocations warped the hiring data. (Source: @infraa via X)

Will AI ultimately lead to fewer jobs and shorter workweeks? When asked that question on Fox News’ Claman Countdown yesterday, Nvidia CEO Jensen Huang looked puzzled.

“No,” he responded. “These tools are so powerful and efficient, we’ll be busier than ever.”

In innovation cycles of the past, new efficiencies generally create jobs – yes, different jobs, new skills – but more of them.

~ Addison

Provocative stuff.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Real assets in general tend to hold their value during inflationary periods — because they’re not just paper promises. They’re tangible. They’re productive. They’re the raw inputs the economy is actually built on.

One of the most obvious opportunities right now — possibly the most mispriced sector in the entire market — is energy.

The world does not exist without energy. Full stop. People have been fed a ridiculous lie that oil is going to disappear and we’re all going to drive solar-powered EVs and Exxon is going to go out of business.

In the U.S., stablecoin rules remain tangled between crypto exchanges eager for new customers and small banks afraid of losing deposits.

China’s Ant Group is filing trademarks for “Antcoin” while the Party debates whether digital dollars threaten national sovereignty. And in Singapore, StraitsX cofounder Samson Leo frets about regulatory fragmentation: “If every jurisdiction requires us to split reserves across their banking systems, customer protection will diminish.”

Stablecoins today are where email was when businesses still faxed each other printouts of their inbox goes an apt analogy suggested by Bloomberg’s Andy Mukherjee.

The rails are there — the habits aren’t. But the shift is coming. And when it does, it won’t just change how we pay — it’ll change who gets paid.

Anticipating a sluggish labor market, the Fed has cut rates twice this fall.

Unfortunately, you can’t fix a reorganization with cheaper money. AI will eat the easy tasks first, so the pain you see — pink slips — is only half the story. Those jobs will likely never return.

If you’re from New York—or know anyone there—you’ll probably agree: most New Yorkers are fed up with crime, the outrageous cost of living, government incompetence and corruption—and, yes, the rats.

But the fact that a hard-core socialist like Mamdani is their favorite pick to solve those problems tells you that most voters have no idea why any of it is happening.