The AI Boom Is Missing the Secret Sauce of the 1990s
Massive AI investment is fueling hopes of faster growth without inflation. But today’s economy lacks the global and fiscal tailwinds that once made that possible.
Illustration: Ema Gaspar for Bloomberg
Months after he stepped down as chair of the Federal Reserve in January 2006, Alan Greenspan visited the Bloomberg News office in Washington, DC. Looking back over the previous decade or so, he explained what was behind that period’s extraordinary slowdown in US inflation. One indicator in particular was key, he said.
Having read up on Greenspan’s analysis before the event, I couldn’t help interjecting. “The import price of Chinese goods!” I blurted out. Greenspan looked over at me and asked whether I cared to deliver the rest of the presentation. I quickly apologized and, of course, deferred to the maestro. While I regret that moment of rudeness on my part, the exchange served to ingrain Greenspan’s point in my mind. And it’s one that rips a hole in a narrative now propagated by President Donald Trump’s economic team.