Good morning. Is artificial intelligence good for the economy? In focus today, we look at how the tech\u2019s emergence compares to earlier eras of disruption.<\/p>\n
Up firstIn the news<\/p>\n
Energy: The B.C. government is backing a proposa<\/a>l to move more Alberta crude oil to the West Coast involving the Trans Mountain pipeline system, in a bid to stave off Alberta Premier Danielle Smith\u2019s ambition for a new pipeline.<\/p>\n Manufacturing: Canadian fertilizer and agricultural giant Nutrien Ltd. has chosen a U.S. location<\/a> for a project that could reach $1-billion \u2013 a blow to the Carney government, which has promised to attract sizeable investments in the mining and resources sector.<\/p>\n Investing: Questrade Financial Group Inc., one of Canada\u2019s longest-standing challengers to the Big Six banks, is launching new trading products<\/a> tailored to a growing wave of sophisticated retail traders.<\/p>\n Open this photo in gallery:<\/a><\/p>\n An Amazon-owned data centre in Ashburn, Va.NATHAN HOWARD\/The New York Times News Service<\/p>\n In focusThe AI divide<\/p>\n Runaway hype around artificial intelligence, rising investor unease and unclear productivity effects have opened a divide among economists over what the new generation of AI systems actually means for the labour market and long-term growth.<\/p>\n The competing views turn on whether the latest wave of AI behaves like earlier technological breakthroughs, with productivity gains arriving only after costly reorganization, or whether its acceleration marks a shift in which automation outpaces the creation of new economic activity.<\/p>\n AI-related capital spending contributed 1.1 per cent to U.S. economic growth in the first half of 2025, outpacing household consumption in an economy typically driven by consumer spending, a recent report from JPMorgan said. The report noted, however, that data centres employ few workers once built \u2013 \u201cespecially compared to a factory or office campus\u201d \u2013 limiting the job creation and local spending that usually follow large investments, a dynamic economists refer to as the multiplier effect.<\/p>\n The debate over whether this boom can generate the kind of broad-based employment and spending associated with earlier technological cycles is central to how economists are navigating early indicators.<\/p>\n \u2018History suggests this lag is normal\u2019<\/p>\n Serdar Ozkan, a senior economic policy adviser at the Federal Reserve Bank of St. Louis, said AI investment follows a much longer pattern of general-purpose technologies that reshaped economies only after years of adaptation. From electrification to the rise of computers and the early internet, he argues, the visible promise of each wave arrived well before the productivity data showed any measurable effect, largely because firms needed time to redesign workflows and workers had to build complementary skills.<\/p>\n \u201cHistory suggests this lag is normal,\u201d Ozkan said. \u201cGeneral-purpose technologies require extensive time for experimentation, process redesign and work-force adaptation.\u201d<\/p>\n \u201cAt the same time, the workers best equipped to adopt these tools may face the most direct competition from them, which makes this transition harder than the cycles we saw with computers or the early internet.\u201d<\/p>\n \u2018This is pure job replacement\u2019<\/p>\n David Rosenberg, founder of the Toronto economic consulting firm Rosenberg Research, said there is a key distinction between technologies that expand an economy\u2019s productive capacity and those that speed up tasks that companies already perform. <\/p>\n AI is firmly in the latter category, he said \u2013 a shift he argues will compress labour demand rather than create new forms of economic activity. \u201cThis is pure job replacement,\u201d Rosenberg said in an interview. \u201cThere is no offsetting multiplier impact.\u201d<\/p>\n The types of work most exposed to rapid substitution include research, analysis and other information-processing roles, he said. Those tasks are increasingly performed at a speed that limits the emergence of new job categories around them, and they reach higher into the white-collar work force than entry-level positions<\/a>.<\/p>\n Earlier technological cycles eventually increased output as firms reorganized and new industries formed, he said. But AI is narrowing that process by directly completing white-collar tasks, rather than enabling workers to do more.<\/p>\n Pain, gain, or both?<\/p>\n The uncertain benefits that AI might bring to business are reflected in the uneven returns it is paying. A new KPMG survey<\/a> of 753 Canadian corporate leaders found that 93 per cent say their organizations are using AI in some form \u2013 up from 61 per cent a year ago \u2013 but only 2 per cent report a measurable return on those investments. <\/p>\n Compared to the United States, Canada\u2019s economy leans more heavily on goods production and resource industries, which are less exposed to the white-collar substitution enabled by AI. \u201cIf you actually produce things that are tangible,\u201d Mr. Rosenberg said, \u201cyou\u2019ll be okay.\u201d<\/p>\n The financial services sector here, however, faces pressures similar to those in the U.S.<\/p>\n \u201cThe typical Bay Street equity analyst isn\u2019t producing stuff. They\u2019re producing research for his or her boss, who now can get it for free and within a matter of minutes.\u201d<\/p>\n ChartedThe decline of R&D spending<\/p>\n A new report is casting a light on historically weak investment levels in Canadian research and development. The snapshot shows an accelerating decline<\/a> relative to global competitors \u2013 a decline that leaves companies with aging equipment and limits how much they can increase production.<\/p>\n Improving Canada\u2019s investment environment was one of the steps a senior Bank of Canada official pointed to yesterday in a speech about the country\u2019s \u2018vicious circle\u2019 of low productivity<\/a>.<\/p>\n Quoted<\/p>\n If you want to live longer, don\u2019t try to change your behaviour; change your environment.<\/p>\n \u2014 Dan Buettner, researcher and reporter<\/p>\n Residents of Lunenburg, N.S., and Parksville, B.C., regularly live well into their 90s, and even past 100. What have they figured out, and how can it be replicated<\/a>?<\/p>\n Open this photo in gallery:<\/a><\/p>\n Rebecca Haines-Saah and her family keep a shared Google calendar \u2014 and an analogue one on the fridge.Rebecca Haines-Saah\/Supplied<\/p>\n NotedMore files we\u2019re following<\/p>\n Online: Today at 1 p.m. ET, Zosia Bielski, Amberly McAteer and Katherine Martinko will answer reader questions and share tips on how to handle packed calendars<\/a>, especially as the holidays approach.<\/p>\n Overseas: Prime Minister Mark Carney is in Abu Dhabi today to build relationships with massive investment funds and deep-pocketed companies in the United Arab Emirates.<\/p>\n By the border: The U.S. ambassador to Canada says he expects<\/a> stalled trade talks between the two countries to resume, but it will be challenging for both sides to return to the table. Idea: Put the table under a nice golden dome.<\/p>\n By the numbers: 81. (Days until spring training.)<\/p>\n Morning update<\/p>\n A relief rally pushed global markets higher <\/a>after AI chip giant Nvidia released forecast-topping earnings<\/a> yesterday and as traders eyed delayed U.S. jobs data later this morning.<\/p>\n Wall Street futures and TSX futures followed sentiment higher.<\/p>\n Overseas, the pan-European STOXX 600 was up 0.9 per cent in morning trading. Britain\u2019s FTSE 100 rose 0.65 per cent, Germany\u2019s DAX advanced 1.22 per cent and France\u2019s CAC 40 gained 0.91 per cent.<\/p>\n In Asia, Japan\u2019s Nikkei closed 2.65 per cent higher, while Hong Kong\u2019s Hang Seng climbed 0.02 per cent. <\/p>\n The Canadian dollar traded at 71.16 U.S. cents.<\/p>\n","protected":false},"excerpt":{"rendered":"Good morning. Is artificial intelligence good for the economy? 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