AI and Jobs: What Data and History Say

Summary

Morgan Stanley's chief economist Seth Carpenter discusses the labor market impact of AI, arguing that early data shows productivity gains and output growth rather than mass displacement. He highlights the role of infrastructure buildout, policy buffers, and the speed of adjustment as key factors. The future is uncertain but the early evidence is cautiously optimistic.

• AI adoption has so far not caused broad labor market disruption.
• Industries with high AI exposure show stronger productivity gains driven by output growth.
• Data center infrastructure spending is still early, with only a quarter of expected CapEx deployed.
• Productivity gains from AI could lead to higher incomes, wealth, and spending.
• New tasks and roles inside corporations may absorb displaced workers.
• Central banks and fiscal policy can respond to mitigate labor market shocks.
• History suggests productivity ultimately wins and employment rebounds, but transitions are uneven.
• The speed of AI adoption relative to economic adaptation is the central risk.