AI is bringing it.

We are on the cusp of a massive economic explosion. When it really gets going is still a mystery but there are some predicting it is only a couple years away.

AI is developing its own singularity. The pace of innovation, according to many, is compounding at an astronomical rate. This means we are going to see the technology exponentially more powerful in a couple years.

It is in alignment with what took place recently. The explosion since GPT3 was introduced is mind-blowing. We are roughly 38 months in and look at how the online (digital) world has changed. Some are forecasting real world AI will emerge in the next few years as robots starting to roll off the assembly line.

There are signs we are seeing things happening now. In this article, we will take a look at them.

The Upcoming Economic Singularity

What is the Economic Singularity?

There are many definitions so we are dealing with a sliding scale. However, my basic interpretation is we will achieve this when there is a 30% growth rate globally. Notice I omitted "GDP" since that is an obsolete metric.

Technology, especially in the digital world, is deflationary. This pushes prices down while also increasing output. It also skews the GDP metrics completely.

An example of this is music. There was a time when it cost around $10 for a cassette tape (roughly 10 songs). Hence, we are paying $1 per song.

Today, look at the abundance of music. At the same time, we get it for basically nothing. The subscription revenue of a Spotify (which is a lot more than just music) doesn't rival that of the record companies in the 1980s. Yet, it is safe to say that people have access to more music (and on demand) than before.

The idea of a 30% growth seems absurd. There could be signs, however, this is changing.

Over the last decade, the US, which is the largest economy at around $30 trillion, had a growth rate of 2.4%. The latest read was 4.3% over the last quarter. This, naturally, is a short duration and should be not viewed in isolation.

But what if we are seeing a major move?

Massive Explosion

The prediction for 2026 is that the US economy will grow at greater than 5%. This is just a forecast so we cannot tout it as reality.

If this does emerge, we should consider what is going on.

To start, this will be double the average annual rate over the last decade. That is an impressive number.

Of course, the political posturing will enter. While that might be some impact, my view is the major effects will come from technology. The AI shift is already underway in my opinion.

We are seeing billions being dumped into data centers and other AI related fields. Every major technology company is involved to some degree. The idea of a $30 trillion economy growing at a 5% rate is fantastic. The challenge is to look at this going to 10% or higher.

This is where the singularity concept comes in. The compounding effects of the technology, if they continue, will be astounding. Basically, large language models (LLM) produce units of cognition. When we consider the impact on the global economy of knowledge work, we can see how massive this could be.

Then, if we couple it with robots, the exit from the digital into real world occurred. No longer are we simply talking about producing more content. Instead, physical items are on the agenda. To increase the output, we simply build more robots as they are the input.

Naturally, there is a lot more to it than that since supply chains can be rather complex. The point being is that AI can assist at every level of the economy.

It can also lead to an enormous jump in the global GDP numbers, even if a failing metric. We are looking at a global economy of roughly $110 trillion. Consider what 30% might look like on this. That is a tremendous amount of wealth that is generated.

AI is leading the way. There are still skeptics who do not believe this is the case. Naturally, they could end up correct. Nevertheless, even 1/3 the economic impact of what I am discussing here would be huge.

By 2030, things will likely be completely different.

Posted Using INLEO