Trade · Berlins Today
Despite promises that AI could prove to be society’s great equalizer, Gregory Daco, the EY-Parthenon chief economist, argues that productivity growth protects margins, not income. He states, ‘You tend to have greater concentration and more of a winner-takes-all type of environment when you have these technological advances.’ In almost every technological revolution—such as the railroad boom of the late 19th century or the 90s dot-com revolution—large, vertically-integrated firms initially capture the gains, while smaller ones face persistent cost pressures, policy uncertainty, and higher interest rates.
In 2026, economic output grew 1.7% in the second quarter, driven by only 0.3% more hours worked. Compensation rose 2.6%, but against oil-driven inflation, this resulted in ‘flat to slight contraction’ in real terms. Meanwhile, corporate margins hit a record 14.9% of GDP, while the labor share fell to 52.8%, the lowest since the government started tracking it in 1947. Daco notes that 50% isn’t a floor and that labor’s share could decline further.
The article also touches on unrelated topics such as: - A Silicon Valley startup developing a brain-computer interface via nanoparticle snorting. - Developers negotiating land in Yosemite National Park. - A pilot failing a military eye test and launching a traffic company. - Marriage customs in Japan regarding surnames. - U.S. Treasury intervention in bond markets and gold exports by the Netherlands. - Market reactions to a weaker-than-expected July jobs report. - Subprime auto loan distress among poorer households. - Online gambling statistics among British adults. - Financial advice from Suze Orman on restaurant spending.
The core focus remains on economic trends and AI’s impact on productivity and income distribution.
Source: Fortune
