Artificial Intelligence (AI) is the new Industrial Revolution.

Last week, market volatility reflected uncertainty about how artificial intelligence will reshape the economy. Early in the week, a report titled “The 2028 Global Intelligence Crisis” alarmed investors by describing a hypothetical future where artificial intelligence tools greatly improve productivity, causing white-collar jobs to vanish, and unemployment to rise above 10 percent.

Innovation and disruption is not new

It’s likely that some types of employment will disappear as AI advances. However, AI is also expected to create new types of employment, just as previous disruptive innovation has done. Kenneth G. Pringle of Barron’s explained:

“That AI technology will come for jobs is certain. The destruction and creation of jobs is a defining characteristic of the Industrial Revolution. Less certain is what kind of new jobs—and how many—will take their place…Think of the automobile industry replacing the horse-and-carriage trade in the first decades of the 20th century, or IT departments supplanting secretarial pools in recent decades…The new jobs can be vastly different in nature, requiring novel skills and perhaps relocation, such as from farm to city in the first Industrial Revolution.”

The current state of AI

Markets calmed during the week as investors recognized that the pace of AI adoption has been slow. In late 2025, about 37 percent of Americans used generative AI (GenAI) at work, according to Alexander Bick, Adam Blandin, and David Deming of the St. Louis Federal Reserve bank.

GenAI was introduced just three years ago, so it’s likely to be more widely adopted over time. Adoption may be slow with AI tools gaining users and increasing productivity over an extended period, mirroring the adoption of computers and software. That said, AI agents, which arrived last year, have the potential to accelerate change. However, according to Edward Harrison of Bloomberg:

“Gartner expects over 40 [percent] of agentic AI projects to be canceled by 2027. Not only are companies unlikely to make immediate and wrenching company-wide changes, they won’t even be able to extract enough benefits from the projects they have in place any time soon. Just as with the personal computer and Internet revolutions before AI, it will be years before households and companies work out how to get benefits from the new technology.”

Friday’s employment scare

The calm didn’t last long. On Friday, markets jolted again when a major financial technology company cut 40 percent of its workforce. The company’s founder wrote, “intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company,” reported Connor Smith of Barron’s.

Major U.S. stock indexes finished the week lower. U.S. Treasuries rallied as yields on many maturities moved lower over the week.

S&P 500, Dow Jones Global ex-US, S&P GSCI Gold Index, Bloomberg Commodity Index returns exclude reinvested dividends. The three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. 

Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

WHAT DO YOU KNOW ABOUT AI? Kevin Warsh, who has been nominated to lead the Federal Reserve (Fed), faces a significant challenge. Along with the other members of the Federal Open Market Committee, he will be responsible for monetary policy and economic stability during a period of enormous innovation. AI tools are likely to change business models and workflows, just as the introduction of the printing press, electricity, the telephone, and the automobile did. See what you know about AI by taking this brief quiz.

1. GenAI is best known for helping people:
   1. Write difficult math equations
   2. Generate new content like text, images, or video
   3. Reach conclusions without any data
   4. Wash cars and bikes

2. Which of these products relies on AI?
   1. Navigation apps
   2. Self-driving cars
   3. Virtual assistants
   4. All of the above

3. In late 2024, Gallup asked Americans whether they had used AI-enabled products during the previous week. Thirty-six percent said yes, 50 percent said no, and 14 percent weren’t sure. When survey participants were questioned further, it turned out many were using at least one AI-enabled product without realizing it. What percentage had used AI-enabled products during the previous week?
   1. 36 percent
   2. 64 percent
   3. 83 percent
   4. 99 percent

4. The first AI chatbot was named Eliza. The bot was developed at MIT. When it was given a “Doctor” prompt, it would interact with the user as though it was a therapist and the user was a patient. When was this bot built?
   1. 1941 to 1944
   2. 1964 to 1967
   3. 2002 to 2005
   4. 2016 to 2020

WEEKLY FOCUS – THINK ABOUT IT

“We are going to have to have different ethics for different artificially intelligent machines. You obviously want a different set of ethics for a military artificially intelligent machine or robot than you have for a care-taking robot.”― Gray Scott, Futurist

Answers: 1) b; 2) d; 3) d; 4) b