Megatrends

Investigating fundamental shifts in the global economy

Vanguard’s “Megatrends” series investigates fundamental shifts in the global economic landscape that are likely to affect the financial services industry and broader society.

AI, demographics and the US economy: Quantifying the coming tug of war

In our latest installment, our data-driven analysis looks at how AI and demographic shifts are poised to define our economic future.

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Will AI transform the way we live?

Vanguard’s global chief economist, Joe Davis, explores the potential impact of artificial intelligence (AI) on our day-to-day lives as part of our new Megatrends research report.

Transcript

Could AI be as transformative as electricity? Can it change how we live?

Health, happiness and progress. If we use technology and if we use data, innovation can be predicted.

We just have to know where to look.

This is a future that very few are actually talking about. Not all technologies change the world.

Think of electricity and social media. Both are ubiquitous. They're all around the world.

But only one changed lives and propelled the global economy forward. Why is that?

Well, it turns out big technological advances, what economists call general purpose technologies. They have two distinct dimensions. They're innovative and they're transformative. Innovative technologies change how we work. You can think of the assembly line, or you can think of the computer, right, assembly line, having some automation for us to run faster. Computers to generate new insights. What I call power tools. Right? Power tools. They're complements to the work we do. We almost take for granted how important computers are in today's society, right?

But not all innovative technology is transformative. Transformation is different because it changes how we live. Electricity was transformative because it improved basic human needs. More importantly, electricity was transformative because it enabled knock on effects and other inventions, right? That without electricity they would just simply not have been possible.

So which one will AI be? Innovative, transformative. And could, could AI be both?

Introducing the Vanguard Megatrends Model

The Vanguard Megatrends Model features three innovative criteria to quantify long-term economic forces:

A uniquely long and rich dataset that captures historical shifts in megatrends across the US and globally.

An integrated framework that allows long-term megatrends and shorter-term cyclical and policy variables to compete in explaining economic and financial outcomes.

An identification strategy that isolates the distinct structural drivers behind each megatrend - the fiscal or technological forces that may have differing impacts on real GDP growth, the nominal federal funds rate, inflation and the earnings yield.

Jun 24, 2024

3 min

Globalisation’s notably muted effect on inflation

Vanguard does not expect a slowdown in globalisation to cause significant inflation, particularly in the US.

May 6, 2024

4 min

AI and demographics: the economic tug of war

The economic future is unlikely to look like the recent past. Artificial intelligence or demographics will drive change.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Important information

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The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information does not constitute legal, tax, or investment advice. You must not, therefore, rely on it when making any investment decisions.

The information contained herein is for educational purposes only and is not a recommendation or solicitation to buy or sell investments.

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Issued in EEA by Vanguard Group Europe Gmbh, which is regulated in Germany by BaFin.