The CBO forecasts that US public debt will increase from the current 100% of GDP to 156% of GDP by 2055 under the baseline scenario.
However, if productivity increases by an additional 0.5 percentage points per year (partly thanks to AI), public debt will only reach 113% of GDP, without the need for fiscal tightening.
Apollo suggests that AI could “solve the US fiscal problem,” but history shows that the productivity impact of technological innovation is difficult to predict.
The Brookings Institution notes that US productivity grew by ~3% per year (1995-2005) due to digitalization, but only by 1.5% per year from 2005-2022; Nobel laureate Robert Solow once said, “you can see the computer age everywhere but in the productivity statistics.”
The impact of AI may be uneven due to different levels of adoption among businesses; Oxford Economics warns that this could be significantly exacerbated with AI.
JPMorgan and the IMF predict that AI could replace up to 50% of jobs in the US by 2034, causing social upheaval if there are no responsive policies.
History shows that major technologies (the internet, electricity, the steam engine) took from 15 to 61 years to have a strong impact on productivity; JPMorgan predicts that AI will only need 7 years.
Goldman Sachs and PwC forecast that AI will boost US growth by 15% and 20% respectively by 2034, while JPMorgan forecasts 10%.
McKinsey argues that growth depends heavily on the adoption of innovation by a few large firms, not necessarily the entire economy.
The Trump administration currently lacks a comprehensive AI policy like Singapore’s, but this could change in the future if social pressure increases.
The White House believes in a positive AI scenario, expecting lower inflation, higher growth, reduced debt, and for the US to benefit more than Europe.
📌 US productivity grew by ~3% per year (1995-2005) due to digitalization, but only by 1.5% per year from 2005-2022. History shows that major technologies (the internet, electricity, the steam engine) took from 15 to 61 years to have a strong impact on productivity; JPMorgan predicts AI will only need 7 years. The CBO forecasts that if AI helps US productivity increase by an additional 0.5% per year, public debt could stop at 113% of GDP instead of 156% by 2055. Despite great potential, risks of job loss, inequality, and a lack of responsive policies could be obstacles. The White House is currently betting on an AI “miracle” for growth and fiscal improvement, but experts warn this could be an illusion.
