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If the AI Industry Fails, It Could Take the Rest of Us Down With It

Don't let AI critics tell you it's good for nothing: the amount of money being spent on AI infrastructure is so enormous that it’s literally propping up the US economy. The drawback, of course, is that if the AI industry fails, it could drag the rest of the economy down with it. In 2024, the S&P 500 grew by an incredible 24 percent — what the investment firm Charles Schwab understatedly called a "very good year." Since 2023, nearly half the growth was clustered in just a handful of tech stocks

Beneath the AI Bubble, the Economy Looks Bleak

The US economy seems to be doing gangbusters lately, largely thanks to incredible booms in the tech sector. The stock market is booming — the S&P 500 hit 15 record closing highs so far this year, while the Nasdaq Composite boasts 17. The country's GDP is growing better than expected. Microsoft just became the second $4 trillion company in history, just weeks after Nvidia became the first. But those headline numbers don't seem to be trickling down to normal, working people. In fact, something i

Trump Is Undermining Trust in Official Economic Statistics. China Shows Where That Path Can Lead

Welcome back! Louise here. On Friday, President Trump fired one of the nation’s top economists after her agency published a disappointing jobs report. Trump claimed the numbers were “RIGGED,” but there’s no evidence that Erika McEntarfer or the Bureau of Labor Statistics (BLS) did anything improper. The new employment data, however, suggested Trump’s policies are having a negative impact on the US economy. In the days since, Republicans have piled on, baselessly accusing McEntarfer of putting o

How AI conquered the US economy: A visual FAQ

The American economy has split in two. There’s a rip-roaring AI economy. And there’s a lackluster consumer economy. You see it in the economic statistics. Last quarter, spending on artificial intelligence outpaced the growth in consumer spending. Without AI, US economic growth would be meager. You see it in stocks. In the last two years, about 60 percent of the stock market’s growth has come from AI-related companies, such as Microsoft, Nvidia, and Meta. Without the AI boom, stock market retur

How AI Conquered the US Economy: A Visual FAQ

The American economy has split in two. There’s a rip-roaring AI economy. And there’s a lackluster consumer economy. You see it in the economic statistics. Last quarter, spending on artificial intelligence outpaced the growth in consumer spending. Without AI, US economic growth would be meager. You see it in stocks. In the last two years, about 60 percent of the stock market’s growth has come from AI-related companies, such as Microsoft, Nvidia, and Meta. Without the AI boom, stock market retur

If the AI Bubble Pops, It Could Now Take the Entire Economy With It

AI companies are pouring so much money into AI, experts are starting to warn that it may be propping up the entire US economy. As investor Paul Kedrosky told the Wall Street Journal, spending on AI infrastructure has already eclipsed spending on telecom and internet infrastructure during the dot-com crisis over two decades ago, raising the specter of a massive bubble. Kedrosky also floated the possibility that we haven't really felt the effects of president Donald Trump's tariffs due to the sc

Feds tell automakers to forget about paying fuel economy fines

Automakers selling cars in the United States now have even less incentive to care about fuel economy. As Ars has noted before, the current administration and its Republican allies in Congress have been working hard to undermine federal regulations meant to make our vehicle fleet more efficient. Some measures have been aimed at decreasing adoption of electric vehicles—for example the IRS clean vehicle tax credit will be eliminated at the end of September. Others have targeted federal fuel econom

Economists made a model of the U.S. economy. Our debt crashed the model

People have been worrying about U.S. debt basically ever since there even was a U.S. “The accumulation of debts is a most fearful evil,” Thomas Jefferson wrote in 1787. At the time, U.S. debt was around $40 million. Today, it’s closer to $40 trillion. At the same time, the U.S. economy is bigger and more powerful than Jefferson could have ever imagined, and things are looking pretty good: unemployment is near record lows, inflation is under control… so what’s the problem? “Part of the problem i

Worse Than a Recession? Trump's Tariffs Risk 'Self-Inflicted' Stagflation

An economic downturn combined with high inflation is a double-whammy for your finances. DNY59/Getty Images/Jeffrey Hazelwood/CNET President Donald Trump's turbulent tariff agenda, combined with mass deportations and increased national debt, has created heightened volatility in financial markets. Though many economists say there's low risk of a job-loss recession, others say we're at a critical crossroads, as consumer sentiment sours and the labor market sputters. Some analysts have even posite

Business Class Ain’t What It Used to Be. Don’t Tell First Class

Five years ago, Covid-19 largely brought business travel to a halt. Now companies are getting their employees back in the air, and carriers are reinventing themselves to appeal to post-pandemic fliers willing to pay more. Airlines worldwide are reconfiguring the real estate on their planes by segmenting their cabins into higher-margin business-class seating. They’re beefing up their traditional business cabins to snag higher fares while providing more luxurious premium economy seating for trave

US economy shrank 0.5% in the first quarter, worse than earlier estimates

WASHINGTON (AP) — The U.S. economy shrank at a 0.5% annual pace from January through March as President Donald Trump’s trade wars disrupted business, the Commerce Department reported Thursday in an unexpected deterioration of earlier estimates. First-quarter growth was weighed down by a surge of imports as U.S. companies, and households, rushed to buy foreign goods before Trump could impose tariffs on them. The Commerce Department previously estimated that the economy fell 0.2% in the first qua

The economics behind "Basic Economy" – A masterclass in price discrimination

Basic Economy fares are ultra-restricted airline tickets that offer a lower base price in exchange for fewer benefits than standard economy class. Introduced by major U.S. carriers in the 2010s, these fares have become a widespread strategy for market segmentation - a textbook example of price discrimination in practice. By design, Basic Economy compels travelers to self-select based on their willingness to pay and tolerate restrictions, thus allowing airlines to maximize revenue from different

The Economics Behind "Basic Economy" – A Masterclass in Price Discrimination

Basic Economy fares are ultra-restricted airline tickets that offer a lower base price in exchange for fewer benefits than standard economy class. Introduced by major U.S. carriers in the 2010s, these fares have become a widespread strategy for market segmentation - a textbook example of price discrimination in practice. By design, Basic Economy compels travelers to self-select based on their willingness to pay and tolerate restrictions, thus allowing airlines to maximize revenue from different