AI Writes A Recession Obituary, But Who’s Running Fact Checks?”

By Oke Kay Synder

Once again, ladies and gentlemen, we are graced with the cheery prediction that a recession is about as likely as me turning vegan and giving up my weekly rendezvous with the Texas BBQ brisket. Who’s the harbinger of such joyful tidings? Why, it’s none other than our collective digital alter ego, Artificial Intelligence.

“Recession canceled!” writes Bernard Baumohl, the chief global economist at the Economic Outlook Group, following up with the sort of optimism usually reserved for newly minted lottery winners or someone who’s just discovered a forgotten Twinkie in the pantry. But, dear readers, with my tongue firmly planted in cheek, I wonder how much of Bernard’s enthusiasm was sparked by AI doing its thing – crunching numbers, looking at trends, and spitting out conclusions.

For all we know, Bernard might be an AI creation himself, programmed with a sunny disposition and a knack for sending warm and fuzzy memos. So what’s the real deal? Can we trust these predictions that the economy is bounding forward like a Labrador after a frisbee, unfazed by the Fed’s successive interest rate hikes or still looming inflation?

Taking a closer look at the source of this rosy outlook, we find references to the U.S. government’s prodigious liquidity unleashing during the pandemic, which has apparently sparked a New Year’s Eve Times Square ball-drop-like cascade of money into the market. A spectacle to behold, indeed, unless, of course, we find that the ball is more of a balloon, ready to deflate at the first prick of reality.

Aha, then comes the “artificial-intelligence craze,” touted as a driving force behind the market’s recent momentum. It’s fascinating that AI, an entity without any discernible emotion, has managed to whip up such a frothy, effervescent market sentiment. Should we be surprised? Well, not really. It’s in AI’s programming to be the cheerleader, it’s the head cheerleader who’s a computer program after all.

But beneath this carnival of optimism, we spot an interesting divergence in viewpoints. José Torres, a senior economist, suggests a possible downturn, saying, “I think the market goes lower from here.” So, while AI is blasting the victory trumpet, its human counterparts still have their reservations. It’s like a modern digital reboot of the Tortoise and the Hare, with AI zipping ahead with claims of a booming economy and cautious economists slowly but surely keeping an eye on potential obstacles.

The U.S. economy has been showing off resilience, outperforming in its quarterly check-up, new orders of manufactured goods have seemingly been popping up faster than mushrooms after a rain, and initial jobless claims have been on a diet. It seems as if AI has been working overtime on positivity.

Liz Ann Sonders, chief investment strategist at Charles Schwab, notes that the stock market sentiment has gotten “pretty frothy,” and just as froth tops off a cup of your favorite latte, it has also put a delicate veneer of vulnerability to a potential market decline. I mean, froth is lovely, but it’s hardly substantial, right?

One wonders whether we’ve let AI’s relentless optimism shape our market perceptions, and whether we’re dancing to a tune that could suddenly change. In a world where the likes of Apple, Microsoft, and Nvidia are riding high on AI’s back, the stock market narrative is increasingly being spun by AI.

In conclusion, folks, I’m all for AI and the wonders it can do, but let’s not forget to add a pinch of human skepticism into the mix. When it comes to predicting the future, even the most advanced AI still can’t compete with an experienced human mind’s intuition, experience, and that elusive quality known as common sense. After all, the computer might say the recession is over, but it doesn’t have to pay your bills, does it?


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