Barron's Streetwise - Terminator, AI Jobs, and Financial Nudism

Episode Date: September 18, 2026

Jack shares his concerns with OpenAI’s chief economist, and adds some fig leaves to his stripped-down investing approach. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And so I feel that with AI, we have to watch these kinds of discussions really closely and look for those canaries in the coal mine for productivity as well as in the job market. That's what we should do. The 10, 15-year forecast, I mean, it's hard to have a high degree of confidence. So most people who make those scenario predictions, they don't put probabilities on them. So it's really hard to use them in any practical way. Hello and welcome to the Barron Streetwise podcast. I'm Jack Howe. And the voice you just heard is Ronnie Chatterjee.

He's the chief economist at OpenAI. that's the company behind ChatGPT. So it's Ronnie's job basically to make predictions about how AI will affect jobs and growth and society and so on. I'll ask him about that stuff and the kind of Terminator doomsday stuff we've all been hearing about. But before we come to Ronnie, I'll say a few words about bonds and financial nudism. You heard me. Let's get into it. Listening in is our audio producer, Emily Sommelin.

Emily. Hi, Jack. Emily, I know what you're thinking. Another boring bond segment. Let's get to the stocks. Let's get to the exciting stuff. Hold on. Would it change your mind at all if I told you that the 10-year Treasury now has a 5% yield?

Is that sweeten the deal for you? It's so thrilling. I never thought so much of my life would be dedicated to this topic. I could hear the enthusiasm. It hasn't been great news for holders of bonds up until this point. They basically lost money. If you hold treasurers, if you're a 60-40 investor and the 40% of your portfolio is in safe bonds, you probably haven't done well on them year to date.

You're probably down. In fact, a diversified portfolio of investment-grade bonds, of all different maturities, something like the ag, AGG, that's an ETF that people often buy for that. That's down over five years. And if you have, heaven forbid, a portfolio of long-term treasuries, like the TLT-Eatf, that's down over 10 years. And that is not what bonds are supposed to do. But every once in a while they do it.

And they've done it recently and it's got people down on bonds. And so we had an episode just recently on this topic where we heard from Jared Woodard. He's the head of the Research Investment Committee over at B of A. And he gave us some ideas, some alternatives, things that you can add to your bond portfolio to try to get some better returns. And now we have a question from Tony. Right? And I thought it was a fair question and a good question, so I wanted to tackle that right from the start. Emily, do you want to read our question from Tony? It's a two-parter, right? Indeed, indeed. So Tony writes, how do you reconcile the comments from Jared Woodard in your recent article and podcast compared to your preference for quote-unquote financial nudism? At what point does it make sense to add to-

Hold on. The way you said it, you brought your voice down in such a way. It made it sound, it made it sound seedy. I know. Well, it's because, Jack, I think there's many people who could willfully misunderstand. They picture someone reading, I won't use the name of our publication. They picture someone reading the financial news. And all you see is a newspaper and the person's behind it, you just see dress socks and nothing else on that person. Is that what they're picturing? And you hope they don't fold it up and step away. That's not what this is. Okay, continue. Pick it up after nudism. So yes, financial nudism. At what point does it make sense to, add diversification to the financial nudism portfolio. And then the second part then, he says, like additionally, the U.S. government has hit over

$40 trillion in debt. And Tony's heard talk that the government will, quote unquote, inflate their way out of debt. And so how would you explain this concept in such a way that is thorough, but also that an eighth grader could understand? And you know what? I'm with Tony on that. I'm going to need an eighth grader who wants an A in the class, but is not ready for high school yet.

Got it. God, I'll explain it. I'm just searching the ticker nude because when Tony writes financial nudeism portfolio, it makes me wonder, is there some ETF money to be made here? I'm not sure that nude is taken yet. Anyhow, that's a topic for another time. So this is a fair question because I have spoken recently here about some things that investors can do instead of their plain vanilla bonds. And we've heard from Jared about these things.

And some of them are somewhat fancy things. And so how do you reckon? By the way, when I have said in the past financial nudism, what I mean is I like an investing approach that is stripped down to just a few essentials. I generally think whenever I hear someone talk about a new theme fund or adding a sector fund or something fan, when people talk about private equity or option strategies or this, that I dislike most things. Maybe dislike is not the right word.

I think you don't need most of the stuff that you hear about on Wall Street. Most of the stuff that is packaged and has a big fee behind it, I think investors can do just fine without it. I think you can use a handful of cheap index funds for basic stock and bond exposure and just save over the long haul like that. And I think you'll do just fine. But of course, you haven't done just fine on the bond portion of that lately. So that's what we're talking about now.

Do you need to get fancier as the nudism approach failed? Maybe bonds and financial nudism just don't go together. First of all, I'll just point out, although I believe that a minimalist approach is sufficient for most investors, it definitely doesn't rule out add-ons for the tactically inclined. Maybe you're someone who wants to have a core of cheap index funds, but you want to pick some stocks on the side. By all means, have at it. I've tried to describe what is good enough for the kinds of people who might be too, intimidated to get even started with investing. But if you're a very experienced investor with other

ideas, all the better. I just don't want inexperienced investors out there saying, you know, I keep hearing about hedge funds or private equity or long, short, this or that, or some kind of high fee principal protection scheme. Am I missing out? No, you're not. But I will say that indexing has always been more awkward for bonds than for stocks. With stocks, to do well, the most important thing is to own the handful of winners that drive the bulk of returns. That's how it works out over the long run. You would be surprised how few companies actually account for the bulk of big stock market returns over time. And it's very difficult to know which companies are going to be those companies in advance. So what you do is you take a scatter shot approach. You own everything. That's a good way to ensure

that you own the ones you need. And it works very well for stocks, especially U.S. large cap stocks. and as companies do better, they get higher weightings in stock indexes. Bond indexes are different. They tend to wait holdings by issuance, and that gives top honors to the biggest borrowers, and that's pretty much the opposite of what a credit officer might do. If you walked into a bank and you said, I'm here for a loan, and I'd like to announce to all the credit officers,

I owe tons of money. I owe an astonishing amount of money. Now, loan me some money. They might be a little hesitant to give you that next loan. So your stock index gives you the most weighting in the best performing companies. Your bond index gives you the most weighting in the entities that owe the most. And that's a little weird. I still do think that indexes are a good idea for most investors.

It takes millions of dollars to properly diversify a bond portfolio. And most active bond managers still struggle to beat indexes after their fees. But if I were a financial nudist looking to add a fig leaf or two to my portfolio, I would look at the bond side first. The next thing I want to tell you here is that the time to really panic about your bonds was about six years ago. That's when the 10-year Treasury was yielding less than 1%. The long-term average is closer to 5.5% or 6%. So less than 1% was really shocking.

When it comes to quality bonds, I believe that the best predictor of long-term returns is the yield you start at. By the way, does everyone know the very basics about how bond returns will? work, you buy a bond, it pays you a fixed coupon, we call it fixed income. And you're going to get that rate each year. And if you hold it until maturity, you're going to get your money back. This is assuming that we're dealing with a quality bond and that the borrower is not going to default on the bond. But if you sell it anytime before maturity, you might get more or less than the face value of the bond. The price of the bond can change between now and maturity, and it changes according to the prevailing level of interest rates. So if I went out and I

bought a 5% bond and then rates shot up to 7% on similar bonds. Well, my bond would suddenly be a lot less attractive. Why would you want mine if you can go out there and get seven? So what would happen is people would pay less money for bonds like mine. The price would fall. And what happens is because the coupons are fixed and the price can change, the yield moves opposite of the price. If the price on my bond falls, then its yield for new buyers is going to be higher. Does that make sense to everyone? That's why we say that yields and prices move opposite of each other. So if you were trying to predict your long-term returns and bonds, you could say, okay, what do I think is going to happen with the level of interest rates and how's that going to affect prices and are we going to sell

some of these bonds early? What about when we add in the yield? But I think the best thing to do is just take the yield you start at and make that your guess. So when the 10-year Treasury was yielding less than 1%, it was a pretty good indicator that your returns on bonds were going to stink and stunk they have. But as the yield gets higher, it provides more cover for future price declines. What I mean by that is we're around a 5% yield on the 10-year treasury now. Now, could the price continue to fall on that bond? Sure, it could. And the yield would move higher as a result. But for you to lose money on that bond here, let's say you're going to buy a 10-year treasury now and you're going to hold it for the next two years for you to lose money after your 5% yield, the price would have to fall to a level that leaves

that bonds yield for new buyers at somewhere in the area of 6.5%. That could happen. We've had times in history where the yield has gone to double digits, but that's rare. The yield could just as easily fall from here and the price increase. It's just to say that starting at 5% on a 10-year treasury, I think you've got a better shot at a reasonable return over time. You've got more cover starting now because you have more yield starting now. So I think it's, you know, reasonable to assume that you can be okay. I think you're going to do better over the next 10 years in bonds than you have done in the past 10 years, is my guess. I don't want to be wishy-washy about Tony's question about whether a financial nudist needs to do different things now.

Let me just run quickly through the four items that we talked about back when we had Jared on. I'll give you an idea why I think he highlighted those particular things. Emerging market bonds, you can use an ETF. I think that's sensible even for a financial nudist. Diversifying overseas fits squarely into what we should all do. And when you do it, you also pick up a currency hedge. So I think that that's pretty sensible for most people. He also talked about fallen angel bonds.

These are bonds that have dipped like one tick below investment grade. So there you're taking on more risks to get more return. But you're doing it in kind of a clever way. It's the sort of most bang for your buck because bonds right at that particular level of credit risk outperform both higher grade and lower grade bonds over long time periods. That's not for everyone, but it might be for you. With emerging market bonds, if you look at the ticker VWOB, you're getting about a 6.2% yield right now. And fallen angel bonds, F-A-L-L-N, you get about 6.8%. Jared also mentioned commodities. Again, I think a little exposure there

is sensible for most investors. The particular strategy he likes is one that uses futures to get commodities exposure. There's a fund called I Shares GSCI Commodity Dynamic Role Strategy, and the ticker is C-O-M-T. Whether you use that or a more standard commodities index, I think it makes sense for a lot of investors. And the last thing he talked about was collateralized loan obligations, and that is a little fancier. It is not the thing that blew up during the global financial crisis. That has a very similar name, collateralized debt obligations. That was stuffed with toxic mortgages. And in this case, we're talking about floating rate loans to companies that have collateral. And it's possible to engineer these portfolios in a way where you're getting the bonds that

get paid first so you can create AAA versions of these. I know when you hear words like engineered, it makes you skeptical. And for that reason, I think these things pay a little bit more than investors can get on treasuries and money markets and so forth because retail investors tend to be turned off from them. But if it makes you the least bit nervous, don't bother. The yield pickup is not humongous. You're talking about something in the area of 4.6% on a AAA portfolio of these.

You can probably find a money market out there paying you a little more than four. If you want to learn more about CLOs, you can look into the ticker J AAA. And that's it for the alternatives. And so, Tony, I hope that squares some of these alternatives with the financial nudism approach. And your other question was, what does it mean if the government inflates away the debt? When you owe money in a currency that you create, that you issue, then you have a choice. You can just issue more currency to be able to afford your future spending. But when you create too much money, it can make inflation rise.

And what does that look like? I don't know if you ever knew someone, let's say going back around the year 2000. Like an older couple who had a house with a mortgage where they had taken a mortgage out in the 70s, in the 1970s. and you looked at their mortgage payment and you were just shocked at what a trivial amount of money they were paying on their house payment. You couldn't believe that houses ever used to cost that much. And how could they have this small of a mortgage payment now? Well, it was a lot of money when they took the mortgage out. What happened was we had heaps of inflation throughout the 1970s and early 1980s.

And when you have inflation, it makes the prices of everything go up and it makes wages go up too. But those payments and the value of the house on that mortgage, they were locked in at some point back in time. And so the dollar amounts we were all used to by the time you saw that around the year 2000, the dollar amounts from back then looked trivial. That's what the effect would be if the government inflated away its debt. It would run hotter than usual inflation and would all get used to higher prices and higher amounts and higher wages and higher everything, but the money the government owes is locked in at some point back in time.

And it would make that money easier to pay. It is not at all cost-free. It would make our lives more difficult. It would make everything more difficult to afford. It would basically be kind of like an indirect tax. I mean, if the government wants to pay what it owes, it can come around and tax you for the money, or it can run inflation to make things more expensive. The problem with doing it the second route is it's hard for bond investors to continue to trust you

if they view you as running inflation hotter than you should. They start to demand higher yields going forward. It can easily get out of control. By the way, the Federal Reserve did raise rates for the first time in three years this past week by a quarter percentage point. I would say financial markets took it in stride. The stock market didn't tantrum. Bond yields were a little bit lower.

We'll see what happens. We should really come around to trying to shrink those deficits. How about we take a quick break here and we come back with Ronnie from OpenAI. He's the chief economist over there and he's going to tell us about what he's seeing in terms of usage

and what he's predicting in terms of jobs and the economic effects. And that's next after this quick break. Welcome back. Emily, what's your level of fear? What's your level of AI panic? Because we've had a couple of weeks now. Everybody's talking about AI is going to kill us.

Where are you on an AI panic one to ten? I'm full pilgrim, Jack. In the face of this new technology, my system is swinging the opposite way. Where I'm like, you know, there's a lot of dignity in butter churning and it's good for the arms. I've noticed, by the way, the buys and the tries. You can see the work you're putting in.

These are butter churning guns. And they're locked and loaded. I've been thinking about Terminator, and I brought this up to Ronnie. You may hear it in the chat. Haven't you heard a thousand different references to that movie when people are talking about AI fears? I always hear them say something like, well, it's not necessarily going to be like Terminator. However, it could be this or that and this. And what I've been thinking recently is why exactly is it not going to be like Terminator?

Because it's been a little while since I have seen that movie. So forgive me if I don't have all the plot points right here. But there was a moment when they talk about the things called SkyNet. And they were like, this is the day or the moment when SkyNet became self-aware. And isn't that what all these people are talking about? And we're approaching the event horizon and the singularity in the moment when the thing's going to be teaching itself. And it's going to get better and it won't need us anymore. I think that that's what we're talking about.

And I know in Terminator, there were, you know, war-making machines and robots. and this and that, the other things, you think, okay, well, we don't have that now. Do we? Well, the world's wealthiest industrialist has like, is almost moving past the car making business. He's very interested in making an army of humanoid robots. You know, to vacuum and help us around the house, hopefully. But, okay, robots. And then the news about wars in the, whether it's the Middle East or Ukraine,

there are daily headlines about this one has. now created a more sophisticated swarm of drones to outsmart this other one. So why exactly are we not talking about Terminator minus the time travel, which by the way, was the only part of Terminator where you had an opportunity to do something about Terminator was the time travel part. And we can't do that because Neil deGrasse Tyson says we can't. So that's off the table. They're only saying it's not Terminator, Jack, because Arnold Schwarzenegger's hard to book. There's no Arnold Schwarzenegger coming to help us. He's retired. I've seen videos on social media of him at his home feeding donkeys in his kitchen. He looks like he's busy. Anyhow, so that's what people are talking about and thinking

about now, and I had an opportunity to talk with the chief economist at OpenAI. And my first thought was, what does a chief economist at Open AI do? Why don't we start there? Let's get to my conversation with Ronnie. So Ronnie, you have, to me, kind of a weird job. I speak with a lot of chief economists. 10 times out of 10, it's a Wall Street person telling me what's going to happen with GDP and what the Fed's going to do about rates. That's not you. You're not here to talk about GDP and rates. You have, you're an award-winning economist with experience in government and academia and on Wall Street. And you're the chief economist at Open AI. I'm sure there's a chief economist at Anheiser Bush, but it's probably not a public-facing person. And you're a person out there talking. So, What's the job exactly? What do you do at Open AI? What is the job? This is the question that my wife asked me when I got the call two years ago. And really three things that I do. One is I spend a lot of time doing research on the economics of AI. My work is organized in the three different areas. We look at the future of labor market, the future of enterprise, and then we look at what happens if AI takes off very quickly and create capabilities that we can't yet even imagine what will be the impact on the economy.

So we sort of divide our work into those street areas. And a lot of my time is spent doing that work. The second thing is I do a lot of external sort of speaking and engagement, podcasts like this one, but also speaking on different stages around the world to kind of communicate what we're learning from that research. And the last part, and I have to say this is kind of the most fun, I spent a lot of time inside Open AI, just trying to learn what is going on, learn from my colleagues.

And I am at a stage of my career when the majority of people I work with, Jack, are younger than me. And that is a blessing from Open AI. I didn't understand that at the beginning, but it really is. And I learned a ton as much as any economists I think can about how AI is actually being built. I'm a New Yorker. We're cynical sometimes by nature. We're skeptical, let's say.

And so I think to myself, maybe part of the job is like a lot of people are anxious about AI. Is it going to be like when we first met AI, you know, with the launch of chat GPT, the public saw it for the first time. They thought, wow, this thing does a lot of things very well. And then they thought, one of those things might be my job. everybody got very nervous. And so my thinking is, is part of the job that you go out there and soothe people's anxieties, do you have a free hand if you see things that we should be worried about to talk, frankly, about, you know, how and why we should be worried right now? What's, what can you tell me about that? I definitely do. I mean, I think one of the really interesting

things about this job is, you're right. In a lot of positions, you might think, okay, you know, what you hear from someone who's studying a particular product might reflect where they sit, you know, where you stand reflects that. For me, however, I mean, I'm looking at data that we have on how people are using AI, but there's also lots of the data from other labs, there's independent economists doing work. We work with a lot of other economists. We work in consortiums. So all that stuff is being put out into the public for people to assess, hey, what's really going on here? The other thing that's really important to me is I submit papers to peer review journals to make sure that the stuff we're doing is up to the standard. We don't have to do that, but we want to do that. And we collaborate with

external sort of academics outside of open AI to make that happen. So for me, that's part of the job. I'd also say, you know, we wouldn't have legitimacy inside open AI if we weren't able to speak about these issues in a really frank way. As you know, a lot of discussion about AI and the economy is driven both from sort of external stakeholders, people in the world talking about it, but there's a lot of interest in that internally as well. And so I feel like very free to be able to talk about these things. I also think my job should be put the data out there, let people analyze it and figure out what their groupages are for themselves. I want you to tell me your latest understanding of what the effect is going to be on jobs.

And tell me in terms of position, rate of change, and direction of change. Like how has your thinking changed over time as you have seen more evidence come in? How worried should we be for the workforce? Should we be worried? Are we doing the right things to help them? What can you tell us? Job numbers might not be changing in terms of the unemployment rate. but the work underneath the jobs are changing.

And so we have a whole series of reports, another one being released called Work at the Frontier. And we're looking at what people use AI for at work. And we're finding more and more people are using AI for things outside their job description. So think about it like this. I'm a financial professional. 43% of the work I do now are things outside of that job description in finance.

I might be building a website. I might be doing accounting. I might be doing IT stuff, you know, sort of coding. We're finding more more work outside the occupation. and some of those tasks are sticking into the workflow and creating entirely new jobs. And so when I think about it, the unemployment numbers are probably the coarsest high-level indicator to think about how AI is changing the job market. We really have to work at the changing frontier of work itself.

And that's kind of what I've been seeing as I've been looking at the data. And I think that's what we'll continue to see going forward. Before I move on from jobs, do you have any advice for that, let's say, a college freshman out there who's really leaning forward for this part and saying, what should I study? What should I do? What should I go into? Tell me, where can I be safe? Give me a safe path. First, you always have to start with empathy. I remember what it was like to be in that

position. My kids will be in that position one day. And like, you know, when you're a college freshman, you're looking at the world, trying to figure it out and make predictions. And it's really, really difficult. And I think back when I was in college, there was this idea that certain professions were going to be sort of the road, you know? If you did this kind of sort of, you know, concentration in investment banking, you would be able to get the job. If you focus instead in becoming this kind of doctor, that was going to grow because of the reimbursement rates in that area, if you did this kind of engineering. You know, some of those predictions were right and some of them were wrong.

And I think looking back, I realized that, like, the first thing is to empathize that there's just a lot of uncertainty in these situations, even when technology is not moving as fast as it is today. The second thing I'd say is, I feel strongly, and I think about this with my own kids, too, that human skills are going to be continuing to be really important. This is not a throwaway. I think really, when I look at people's jobs, I think about what is a differentiator between human and machine, it is the ability to be a human. When I think about health care and education, two sectors where jobs have actually been growing, you think about the human element being indispensable.

Now, not everyone's going to want to go into those two sectors. I get that, but I do think that the human element will be important in other sectors as well. We're still going to need leaders. We're still need people to make decisions about delegation. And in current legal structures, and it's a good reason that they're that way, we need to be accountable legally for sort of what they do at work. And so I feel like those are all things where humans will remain in the loop. And I've said this before, I'll say it again, I'm pretty bullish on humans. I think, though, focusing on something you're passionate about is a really good way to start, no matter what area you're in.

I also think I wouldn't throw away STEM as a career that's not interesting just because AI is really good at coding. We may have overcalibrated, you know, a decade ago by saying every kid should become a coder, but I think we might be going the other direction now, Jack, to be honest, by saying that you can't learn anything valuable from studying computer science. You don't study computer science just to get a job in computer science. You don't study engineering just to get a job in engineering. Those are important, but those skills can be really useful in a wide variety of jobs. I've talked to people across a variety of occupations with an engineering background, and they don't regret that they study the engineering.

In fact, it's the most indispensable thing to what they do. So I think these are the kinds of things I would try to help a college freshman with. But you've got to start with empathy, no matter what the numbers are, no matter what the unemployment rate is, people are anxious and you just have to meet them where they are. And I think about that, too. The evolution of this thing, you know, good or bad, it seems to be just moving quick. and accelerating. And each week we hit a new thing where this is the thing in the public's mind right now. And in recent weeks, that thing was, there's been a lot of, a lot of sort of dark thoughts and gloomy thoughts about risks to people's lives. As I say, we used to think that AI was coming for our

jobs. Now we worry that it's going to come for people's lives. And so I see all these different essays and articles and people talking about this. And I used to say, well, you know, it's not going to be like Terminator, but it might be this, but then I say to myself, well, wait a second, there are all these machines flying around. We have wars in certain parts of the world and drones and swarms of drones. Who's to say it's not going to be a little bit like that? Let me take your temperature on this. How are we doing as the frantic public? Are we, too frantic about this? Are we not frantic enough? Or are we just the right amount of frantic for the potential for doom or harm to come out of this?

I think the public has to have a say when it comes to a technology that is this important, this impactful. So to me, the public attention on it, look, I may have my different view, let's say when someone says about the impact of the AI and the economy or on our kids. And some of that comes from me knowing a lot about the technology, having done research, but it's my opinion, how I approach the issue. So having different opinions about that is okay. And honestly, I'm proud to live in a society where we can have that debate. That's really, really important. We wouldn't want it any other way. I do think on a couple issues, I'll flag. One is I think that it's easiest to look at the things that we can see in front of us and not always appreciate the longer term risks.

I think the other thing I'll say is we have to have better data on the things we can count. If we're worried about particular impacts on the job market, for example, this is why I do the work I do. This is why we release frequent data because I want people to see if there's a canary in the coal mine, which is actually a title of someone else's really interesting paper. If there was a canary in the coal mine, I want to be able to identify that. And I want to make sure that people can act based on that, whether they're policy or enterprise. So a lot of that I also say would be on AI labs like IRS to basically produce the data to let people understand what's going on. That's important. So whether the public is well-caligated or less so on a particular issue, to me, that's hard for an individual to judge.

But I think the best thing we can do is release the data that we have, you know, within reason for me to economic data is where I live, to allow people to make some of these informed decisions themselves. I think we have to give people the agency to say, here's the data. and then they can figure out how to think based on that and the evidence they have. I think the public attention on AI is not surprising to me. This is the biggest story in the financial markets. It's the biggest story in politics. It's the biggest story with economists.

It's the biggest story in education. So the idea that we're focused on, hey, what is this thing and how are we going to use it and how are we going to make sure that it benefits people? To me, that's like natural and not surprising at all. And it has a lot of importance. It's going to be the most important technology of our time. How do you forecast, you know, an economist, everybody must want your five-year, 10-year forecast.

How do you do a thing like that with something like AI? Because if I think, you know, at the rate that this thing is changing, I think 10 years into the future, I don't know. It could look like this or it could look like the Jetsons. I mean, I don't know what to think. How do you go about modeling years in advance about how you think AI is going to change people's lives? By the way, it's fun to go back and watch the Jetsons and think about what we have today.

But I'll say this. I think that making those productions, is really difficult, and there's a lot of prognostication going on. For me, the way you build trust is you try to look at the data you have and make the best sort of, you know, assessments of that. That's why I've usually avoided these long-term predictions, partly because it is really hard to see. And also, you know, people are relying on you if you have some knowledge of this phenomenon

to kind of, you know, give them advice or give them a sense of what to study or what to do. And if you're too confident about those predictions, you present them as fact, you can really lead people the wrong way. So for me, I try to look at the impact on the job market, for example, now. I also look at the impact on GDP. That's one thing people are really interested in forecasting. For me, I think we know this from people who follow the financial markets. AI is already having an impact on the job market or on the GDP and growth.

It's through the CAPX channel, though, right? It's through the massive investments in infrastructure that could be adding, I don't know, call it 40 basis points to one percentage of GDP increase. The channel people really are interested in now next is productivity, right? And economists are thinking about this in TFP. If you think about... Because that's the difference between... When people say, hey, is this a bubble? Should I feel okay about the S&P 500 here?

Should I sell now and take profits? It all kind of hinges on that. We've got this tremendous KAPX build out, but do we then shift into this thing, making people more productive and sort of adding permanently to our growth going forward? Does that, you know, how does that play out? And that is the big question. So a lot of people want to make these long-term forecasts. For me, I try to look at the data I'm seeing right now.

A couple of things. One is, if you look, the St. Louis Fed did a nice study recently, where they looked at a bunch of firms in their district, and they found sort of earnings calls, and the percentage of them they coded as how many mentioned positive productivity from AI, and they've seen that number over time going up. So, like, one data point, it's not a large-scale sample, it's one regional fed, but they're tracking that.

Second thing I do, I do a lot of grounded work with companies. So we released a Harvard Business Review article recently that featured the case study of Lowe's. I see how Lowe's is using AI in their stores to increase same-store sales. It's a classic sort of uplift story from AI and how they've done it. And then the third thing is I start to look at adoption across industries. And you see widespread adoption of AI, but it's still relatively shallow in most industries.

Most people are still using it like a chatbot or a calculator, not as an agentic coworker. And I think as you see that transition from chatbot to agentic coworker, that will be a way that we'll see much more in terms of the productivity increases. Because just using AI as a chatbot is fantastic, but there's so much that can be online. So I think these are the things we need to study. We're looking at these piece by piece. That's where some of the productivity is going to show up. Just for people who are history buffs are not too recent or recent history buffs, look at the 1990s and how they were tracking the impact of, you know,

ICT or information technologies impact on the economy. There's a famous Epo MC meeting with Yellen and Greensman kind of going back and forth to say, hey, where's this showing up? It hasn't showed up in the data, right? Back to that old Robert Solo quote about computers are everywhere excepting the productivity. That was what was happening in the 1990s too. and they end up revising upward this really key corner where productivity was increasing a lot more than I thought

because of measurement issues. And so I feel that with AI, we have to watch these kinds of discussions really closely and look for those canaries in the coal mine for productivity as well as in the job market. That's what we should do. The 10, 15-year forecast, I mean, I don't know, I think it's fun to do, it's fun to look at

and imagine what these things could be, but it's hard to have a high degree of confidence. So most people who make those scenario predictions, they don't put probabilities on them. So it's really hard to use them in any practical way. Ronnie, you've been generous with your time, and I appreciate it. You're one of these guys where I'm going to get emails from people saying, Jack, you're an idiot.

You should have asked them this and you should have asked them that. So I'm going to write them all down, and maybe we can connect down the road. I'll ask you all the things that I should have been smart enough to ask you the first time around. Thanks a lot for taking the time to chat about this with me. Oh, Jack, thank you for having me and happy to come out again, answer all those other questions too. All right. Take care. Thank you.

Thank you, Ronnie. and I want to thank Tony for the question. I want to thank Arnold in the kitchen with the donkeys. Emily Sumlin is our AI-averse audio producer. You might have a drone army,

but she's got butter churning guns, folks. You can catch me bringing my wares to the town square, and my prices are competitive. If you have a question about investing like our friend Tony, you'd like it played and answered, go ahead and send it in.

It could be in a future episode. You just tape it on the voice memo app on your phone, you email it to jack.how, that's H-O-U-G-H at barons.com. You can subscribe to the podcast on Apple Podcasts, Spotify, YouTube, and elsewhere. Write us a review or leave us a comment. Are the fears on AI overblown or underblown or adequately blown? See you next week, we hope. I'll be back after I feed these donkeys.