The use of AI kept the US running, while the war on Iran prevented the economy from collapsing

The only thing keeping the US economy from collapsing is the use of AI: Otherwise, the nation’s growth numbers would be in the toilet, dragged down by the Iran war that is driving up fuel prices and sending American consumers straight into the poor house.

That, at least, is the gloom and doom happening in the mainstream media and some parts of Wall Street lately – and Cassandras adds for good measure that the artificial intelligence bubble is poised to pop any day now, leaving millions jobless amid a crisis of corporate bankruptcy.

Count me in as a skeptic.

Ditto for many more conservative market watchers who track the numbers closely.

No – things are not right.

The average American is feeling the pressure of higher prices at the pump and in the grocery store.

And yes – the creation of AI will end at some point, which means the economy will have to work for itself.

But take a little time to check the facts and you may be given a break.

In fact, you might see how things can get better and faster if a few things break it down.

Veteran market strategist Jason Trennert of Strategas Research Partners tells me that “If it weren’t for the war, we’d be talking about a resurgence of the economy.”

He points to President Trump’s tax cuts for business and his ban on tax increases for consumers.

The tax break “almost seems prophetic in anticipation of war,” he said.

He also points to last week’s jobless claims coming in below 200,000 – “the lowest since 1969 NOT to be corrected by population growth.”

Wages increased by 178,000 in March.

Corporate profits remain strong, which is why stocks keep setting records.

And they are a forward-looking indicator of good things to come.

That doesn’t mean the empty glass crowd has no places to speak.

Inflation recently came in at 3.5%, and 3.2% if you exclude volatile items such as energy and food.

Joe Biden’s spending spree and Jerome Powell’s dodgy monetary policy have caused a historic rise in inflation that has slowed but still leaves prices rising.

The job gets successfully

This column has never been a fan of President Trump’s bombing of the world.

Treating Canada like China is not good policy, and even though the White House has backed it on the scale of the “Independence Day” levies, they are still entrenched in the US economy.

They act both as a tax increase on consumers and, at least initially, as proof of inflation.

Meanwhile, Powell, the soon-to-be-departing Fed chairman, says that although unemployment figures are still low, for people looking for work “it doesn’t feel like a labor market” as few new jobs are being created or GDP is growing.

That seems like a scary fact of life with the advent of AI.

OK – but here’s where the “panicans,” as our president likes to call them, start to lose me.

Look at the latest economic data: 2% economic growth – even if driven by AI – is a strong number that could become stronger thanks to AI.

Even when spending stops at technology development, the benefits in terms of productivity start when it takes hold and the workforce becomes more efficient.

Innovation creates work

I know there is a bear case for AI – namely that it will trigger a career apocalypse.

We have written more about it in these pages.

But that is true of all new technologies. If history is any guide, other, better paying jobs are always being created.

The invention of this car made buggy-whip builders so upset that they got a job at a Ford assembly plant.

BTW, another big reason for the creation of AI is Trump’s tax and deregulation agenda.

His “Great Bill” is one of the best pro-growth policy pieces in recent history with its massive tax incentives for business investment.

The result: 10% and more growth in this area, according to the last GDP report.

Yes, much of it comes from AI, but other sectors are also poised to take advantage when the business cycle turns.

While the Iran conflict is clearly a drag on the economy, it won’t last forever or high fuel prices.

As with the creation of jobs from the development of technology, the same pattern is followed when you get the benefit of silence.

And the economy – here and abroad – is bound to improve once investors realize that the world’s biggest sponsors of terrorism, the mullahs of Iran, are completely bankrupt.