The American Economy in a New Era

The US economy is entering a new era. Rapid advances in artificial intelligence portend large-scale disruption to households, businesses, and public finances. Ongoing geopolitical tensions in the Middle East, Europe, and China have strained supply chains and driven inflation back to the highest levels since the COVID-19 pandemic. How can policymakers and business leaders promote broad-based domestic growth and America’s global economic competitiveness in this new era?

This event featured Stanford University’s Erik Brynjolfsson and Lazard’s Peter Orszag in conversation with AESG Director Melissa S. Kearney.

Key takeaways from their conversation include:

  1. US economic growth is driven by AI-related activity. Due to continued, large-scale investments in AI infrastructure, Orszag described the US economy as a “levered bet” on AI. To see this bet pay off, the US must continue to lead the global race in the development of frontier AI models and accelerate the diffusion of the technology across the economy.
  2. AI is producing significant but gradual shifts in the skills workers need. Economic data does not suggest the US economy is currently in the midst of the AI-driven “jobs apocalypse” many predicted. However, as Brynjolfsson framed it, increasingly capable AI models are commoditizing the ability to produce high-quality answers, and the future of work will therefore lie in the ability to ask the right questions.
  3. Concentration of wealth and power remains a significant risk. The US economy has already witnessed increased concentration of production over the past several decades amid the emergence of “superstar firms.” AI could accelerate this trend if left unaddressed, underscoring the importance of proactively designing policy tools to counteract greater concentration.
  4. Optimism for the future of the US economy hinges on proactive guardrails. Despite significant short-term risks — ranging from rogue model behavior to labor market disruption — Brynjolfsson and Orszag agreed there remains long-term potential for AI to produce meaningful gains in worker productivity and economic growth. The next decade could mark one of the most prosperous periods in human history, but only if leaders proactively manage risks associated with AI development, strengthen social safety nets, and steer the technology toward complementing — rather than replacing — human capabilities.

Speakers

  1. Erik Brynjolfsson
    Jerry Yang and Akiko Yamazaki Professor and Senior Fellow Stanford University
  2. Peter Orszag
    CEO and Chairman Lazard
  3. Melissa S. Kearney
    Director, Aspen Economic Strategy Group Gilbert F. Schaefer Professor of Economics, University of Notre Dame