Falling Rates. Rising Productivity. Are You Rooting for the Wrong Things?

The current AI-driven productivity boom faces scrutiny regarding its sustainability and economic measurement. While AI significantly enhances output in sectors like software development—where coding efficiency has surged—the true economic value remains difficult to quantify against massive corporate investment. Historical data suggests that productivity spikes often occur during recessions as companies downsize to survive, raising questions about whether current gains reflect genuine technological advancement or temporary cost-cutting measures. Meanwhile, value capture in the AI ecosystem appears concentrated at the frontier, where leading models orchestrate more efficient, commoditized alternatives. Distinguishing between cyclical recessionary effects and structural AI-driven growth is essential for understanding the long-term economic impact, as enterprises continue to invest heavily despite the ambiguity surrounding measurable revenue and efficiency returns.