✨📉 AI progress amid macroeconomic wreckage

Idiosyncratic policy chaos makes a technology-driven 'golden age' less likely

My fellow pro-growth/progress/abundance Up Wingers,

Take a look at these postings on X, the microblogging site, by two policy people I would classify as UWs, the first from the center-left, the second from the center-right:

What they’re referring to is America’s inopportune experimentation with really bad macroeconomic policy. For example:

• “Trump Team Weighs Broader, Higher Tariffs” - WSJ

• “Trump says he’s considering ways to serve a third term as president” - AP

• “Trump Warned U.S. Automakers Not to Raise Prices in Response to Tariffs” - WSJ

• “Trump is asserting extraordinary power over independent agencies. Is the Fed next?” - NPR

The headlines — I also could’ve mentioned bad news on immigration and government R&D — suggest multiple pillars of America's economic model face challenges, from the engine of global prosperity … to the constitutional bedrock of democratic capitalism and policy predictability … to the invisible hand of prices that guides efficient resource allocation … to guardrails that ensure market stability and fairness.

Oh, and let me add this from Goldman Sachs:

For the second time in less than a month, we are raising our tariff assumptions. … Higher tariffs are likely to boost consumer prices, and we have lifted our yearend 2025 core PCE inflation forecast by 0.5pp to 3.5% year-on-year. Reflecting both the tariff news and a decline in our Q1 GDP tracking estimate to just 0.2%, we have also lowered our 2025 GDP growth forecast by 0.5pp to 1.0% on a Q4/Q4 basis (and by 0.4pp to 1.5% on an annual average basis). And because of the GDP growth downgrade, we have raised our yearend 2025 unemployment rate forecast by 0.3pp to 4.5%. We now see a 12-month recession probability of 35%. The upgrade from our previous 20% estimate reflects our lower growth baseline, the sharp recent deterioration in household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies.

But aren’t Yglesias and Dourado (and GS, too, I guess) missing something — like, you know, the Generative AI Revolution? Did they miss the president’s accelerationist executive orders on AI and the National Environmental Policy Act?

I doubt it. Instead, they’re acknowledging that technological progress isn’t the only thing that matters right now.