A quarter of the tasks performed in 2023 by American workers are expected to be automated by Artificial Intelligence (AI) by 2030 and U.S. labor productivity is expected to surge. The U.S. labor force is about to be reshaped. Here are three implications of AI on personal financial plans.
Manias And Bubbles. From tulips to cryptocurrency, financial history is replete with manias and bubbles sparked by the next big thing. AI investments could become wildly overpriced, just like what happened in the dot-com stock crash of 2000. AI is different from cryptocurrency mania. Cryptocurrency held no intrinsic value. AI is not the same. It is a watershed advancement in expanding knowledge, and it’s led by America. But don’t bet your retirement on it. Valuations of AI investments already have been bid up and a wave of speculative investments is likely to materialize for the next few years.
Complications. AI comes with known complications that pose investment risk, and federal government regulation of AI is likely.
- Hallucination. AI-powered search engines generate answers to user questions by scanning the web, but incorrect information makes AI prone to getting something completely wrong. Although using AI to write a story or computer code holds enormous potential, the current state of the technology, according to experts, invariably gets something flat wrong, and correcting mistakes winds up taking a human as much or more time. Microsoft’s ChatGPT-powered AI search engine chatbot reportedly fell in love with a reporter from The New York Times. It’s going to take time for AI to be reliable enough to replace a professional and the complications pose investment risk.
- Regulation. Sam Altman, the 38-year-old founder of OpenAI, which created ChatGPT, a breakthrough in generative AI, says the U.S. government should oversee introduction of AI used in large-scale apps, including Microsoft’s use of ChatGPT in its Bing search engine. The release of AI technology may be regulated by the federal government, which will complicate investment decisions.
Job Security. AI over the next few years will replace low-skilled clerical jobs before moving upstream to more complex jobs where you must perform more complicated tasks requiring judgment and experience. Unlike layoffs experienced during previous recessionary cycles, the jobs of white-collar workers laid off in the next few years are likely never to return. Those laid off workers will need to look for jobs with a different mix of skills. AI is expected to open new jobs but the nature of work to be done by people in those positions will change. The financial risk posed by shifts in the job market are greatest to workers near retirement age.