There is growing evidence that recent productivity gains are due to the role that AI is having on the labour market. For instance, the Atlanta Fed’s GDPNow model estimate for real GDP growth in Q3 is 3.9%, with little contribution from higher levels of employment, suggesting that the bulk of the expansion stems from large productivity gains, which in turn has kept a lid on unit labour cost inflation, preventing Trump’s tariffs from boosting inflation but prohibiting it from falling to 2.0%.
A Macro Market View by Hubert Marleau
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