North Island's Glenn Hutchins on the economy, strength of the labor market and impact of AI

It's a good question, Becky. But first, as I was suggesting earlier, I want to congratulate you on your CURES initiative. Thank you. I'm very proud of you. It's an important thing you're doing and you have all of our support.

So from the jobs report, you've had other people on the show who have talked about what exact number they're looking for and how the numbers have changed based upon immigration policy and all those sorts of things. So as I've thought about it, the question people ask me a lot, and I've seen a lot of writing about it, is this conundrum between weak employment market performance—either job creation or unemployment—strong GDP growth, and companies reporting they're not extracting much value yet from their AI investments. So how pre-AI investments do we have in this economy that is having this weak job performance? And as I've gone out and looked at companies, I think something pretty straightforward is happening. Company after company are right now extracting value in the form of efficiencies from the last ten years of investing in things like the cloud, big data, and machine learning. These companies are also very disproportionately being run by a next generation of leaders who are digital natives and tech-savvy. So rather than the resistance to characterizing the adoption of technology in the past, they are now embracing it and using it. So you're seeing them extracting huge amounts of value from AI investing.

Well, that's the important question. So the same young group of entrepreneurs, executives are—as opposed to the prior cohort that resisted and dragged their feet around investing in the cloud, for instance—moving very aggressively to invest in AI. AI will, of course, have the same J-curve. You'll have to make a bunch of investments, you'll have to hire a bunch of people. But because of this aggressive and early investment, I would expect it to explode in a way that we haven't seen before from the last waves of investing.

That's largely an artifact of AI investing, with one exception, which is the massive investment that's happening right now in the data centers. That's obviously roaring through the economy.