It was early November and the stock market had grown jittery as investors were once again spooked by the giant bets the nation’s biggest tech companies had made on artificial intelligence (AI). But the unrest unfolding on Wall Street that day was barely noticed at the White House. Asked if he feared a bubble in the sector, which could harm the economy if it burst, President Donald Trump quickly dismissed any doubt.
“No,” he replied immediately. “I love AI.”
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For Trump, the looming new disruptive IT era brings no risks, only rewards. Over the past year, the president and his top advisers have fully embraced artificial intelligence and pumped money and regulatory support into their major backers in an effort to boost one of the key areas of growth in an otherwise fragile U.S. economy.
That optimism was evident Tuesday after the federal government announced that the U.S. economy grew more than 4% annually last quarter. Kevin Hassett, director of the White House National Economic Council, told CNBC that the new data indicated the president’s broader agenda was working, while also pointing to signs of an AI boom.
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The government’s unwavering support stands in stark contrast to the more cautious tone taken by economists and even some Silicon Valley technologists. Many still question whether AI could lead to significant job losses, at least temporarily, and express concerns about the speed and methods that have allowed the sector to grow in ways that may be unsustainable and create financial instability.
The White House has largely dismissed these concerns. Instead, Trump — who has long viewed the stock market as a barometer of his economic success — turned to courting and celebrating the soaring shares of big tech companies like Nvidia. The stock market broke records again on Tuesday, driven by technology companies linked to AI.
“Generative AI has the potential to be a game changer in terms of productivity and the economy,” said Glenn Hubbard, who chaired the Council of Economic Advisers during the George W. Bush administration. He described the technology as “a huge positive”.
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But, he says, that doesn’t mean there aren’t economic and political constraints — in how AI is funded, in its impact on communities, and in the jobs it can replace.
“AI is advancing rapidly and we haven’t really helped people deal with globalization and technological change over a 30- to 40-year period,” Hubbard said. “We probably won’t do it again.”
Massive layoffs or a “great coach”
Policymakers in Washington generally agree that AI signals a generational shift, with enormous implications for everything from medical research to warfare. This helped spark a boom in IT investment and a new growth spurt for the economy as a whole – something Trump attempted to maximize.
Through a series of executive orders signed over the past 11 months, Trump has taken steps to eliminate regulatory barriers and make it easier for technology companies to build data centers, provide power for their operations, sell chips and obtain critical materials.
He did so under the leadership of David Sacks, a Silicon Valley investor who now works in the White House and who has publicly likened AI skeptics to a “doomsday cult.”
Trump framed the race to develop AI as an existential competition against the superpowers, a “rapid competition” that could also create thousands of U.S. jobs in the years to come. But that optimism has only accelerated a long-running debate about the extent to which AI can disrupt entire industries by spurring growth without creating jobs — or, worse, putting people out of work.
Bharat Ramamurti, who was an adviser to the National Economic Council during the Joe Biden administration, said AI was unlikely to be “wonderful for the economy” without harming the job market.
“One thing goes with the other,” he said.
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For now, economic data does not indicate mass layoffs due to AI. But a growing body of research suggests how technology could reshape the workforce, particularly among younger Americans, including recent college graduates.
A study by the Federal Reserve Bank of New York found that companies in the region that adopted AI mostly chose to retrain their workers rather than lay them off. But what is more striking is the slow pace of recruiting new employees. In August, about 25% of respondents said they planned to cut back on hiring over the next six months, particularly for positions requiring a college degree.
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The New York Fed report aligns with recent data from researchers such as Erik Brynjolfsson, a professor at Stanford University, who found evidence that AI adoption has disproportionately reduced the employment of workers aged 22 to 25 in sectors heavily impacted by technology.
At the White House, Hassett often argued that AI would complement, not replace, human labor, essentially functioning as a “great coach” for workers.
AI’s impact on employment has attracted increased attention from the Federal Reserve, whose mission is to promote a healthy labor market while keeping inflation low and stable.
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In an interview, Fed Director Lisa Cook said AI could have a “positive effect” on the central bank’s efforts to combat inflation — provided recent productivity gains continue to accumulate rather than peter out.
“I think about the history of technology and invention and innovation, and I see both positive and negative aspects of it,” Cook said of the broader economic implications of AI. She added that she would continue to keep an eye on “the impact this will have on the workforce.”
“We are monitoring this very closely,” he said.
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