In the United States there is an indicator that measures people’s mood, consumer confidence. It has been produced by the University of Michigan for more than seventy years and works as a monthly survey in which they call thousands of households and ask them how they feel about their current economic situation and their expectations for the coming months. The answers are converted into a number. When the number goes up, it means that people trust, consume, invest, and the economy is moving. When the number goes down, the country comes to a standstill.
In November that number fell to 50.3, a value so low that it was only seen during the most serious crises, and the reason is not a war or a natural disaster, it is fear. The fear of job loss, of a future that falls apart without warning. In October, 150,000 jobs were lost in the United States, three times more than the previous year.
Companies hired technology without limits during the pandemic, however, now they are laying off en masse. Artificial intelligence has become a direct threat to millions of workers who see how machines do more and more things and do them better. In theory, the economy should expand with efficiency, productivity and more production capacity with less effort. However, the opposite occurs. Consumption stops, people save out of fear, companies stop investments, and the cycle that should be virtuous becomes recessive.
It is the same reflection that we saw during the pandemic, when no one knew what was going to happen, uncertainty blocked the global economy beyond any objective data. The result was a synchronized decline in world trade. What we see now is similar, only more dangerous, because there is no virus to explain the panic. There is a diffuse feeling that everything changes too quickly and governments do not understand what is happening. Meanwhile, jobs, stability and the security of families are at risk.
That combination can produce a new form of deflation, not due to excess supply or monetary policy, but due to emotional paralysis. It would be a recession caused by panic. If governments continue discussing trivialities and do not prepare the population for the technological transition, what is coming will not be an explosion of prosperity, but a freezing of collective spirit.
Artificial intelligence can multiply productivity, but if people do not believe in the future, there is no point in producing cheaper and faster. Trust is not generated by machines, it is generated by the feeling that someone knows where they are going. Today, neither the State nor companies can answer that question.
Things as they are
Mookie Tenembaum addresses international issues like this every week with Horacio Cabak on his podcast El Observador Internacional, available on Spotify, Apple, YouTube and all platforms.
