Bullock Sounds Alarm on AI Bubble and Housing Market Downturn
Reserve Bank Governor Michele Bullock expressed concerns about the impact of AI on Australia's economy, suggesting that it may be a bubble and not yet contributing to increased productivity. Speaking at a CEDA event in Sydney, Bullock stated that there was no evidence to support claims that AI is making economies more efficient, as some government officials have suggested.
Bullock cited research from the Reserve Bank's South Korean counterpart, which found that employees using AI produced the same output but worked 1.5 hours less per week. This could indicate that productivity has declined due to the adoption of new technology while people try to figure out how to use it effectively.
The Australian government's intergenerational report relies on a significant boost from AI, projecting that Australians' inflation-adjusted per-person economic activity will rise from $99,200 today to $157,300 by 2066. However, Bullock acknowledged that this assumption may be unrealistic and suggested aiming for the target.
In other news, housing market downturns have been deeper than in Australia's recent history, with home loan approvals slumping significantly. Reserve Bank Governor Michele Bullock described house prices as 'pretty unaffordable' before the decline and stated that the slump is not out of the ballpark compared to past downturns.