good morning. Is artificial intelligence good for the economy? Today we will focus on how the emergence of the technology compares to previous disruptive eras.
first up
on the news
Energy: B.C. government supports proposalI The Trans Mountain pipeline system aims to move more Alberta crude oil to the West Coast, in a bid to thwart Alberta Premier Daniel Smith’s new pipeline ambitions.
Manufacturing: Canadian fertilizer and agriculture giant Nutrien has chosen the United States as the site for a project that could reach $1 billion, a blow to Carney’s government, which had promised to attract huge investment in the mining and resources sector.
investment: QuestTrade Financial Group, one of Canada’s most long-standing challengers to the big six banks, is launching new trading products to cater to the growing wave of sophisticated individual traders.
Amazon-owned data center located in Ashburn, Virginia.Nathan Howard/New York Times News Service
in focus
The AI divide
Out-of-control hype around artificial intelligence, growing investor anxiety, and uncertain productivity implications have left economists divided over what a new generation of AI systems actually means for the labor market and long-term growth.
Competing views focus on whether the latest wave of AI acts like earlier technological breakthroughs, delivering productivity gains only after costly reorganization, or whether its acceleration signals a shift in which automation outpaces the creation of new economic activity.
A recent report from JPMorgan found that AI-related capital spending contributed 1.1% to U.S. economic growth in the first half of 2025, outpacing household spending in an economy typically driven by consumer spending. But the report notes that once built, data centers employ fewer workers, “particularly compared to factories or office campuses,” limiting job creation and local spending associated with large investments, what dynamic economists call a multiplier effect.
Debate over whether this boom can generate the widespread employment and spending associated with early technology cycles is central to how economists judge early indicators.
“History suggests this delay is normal.”
Serdar Ozcan, senior economic policy adviser at the St. Louis Fed, said investments in AI follow a much longer pattern of general-purpose technologies reshaping the economy only after years of adaptation. The tangible promise of each wave, from electrification to the rise of computers and the early Internet, arrived long before productivity data showed measurable effects, in large part because companies needed time to redesign workflows and workers needed to build complementary skills, he argues.
“History shows that this delay is normal,” Ozkan said. “General-purpose technologies require significant time for experimentation, process redesign, and workforce adaptation.”
“At the same time, the workers best suited to adopt these tools may also face the most direct competition from them, making this transition more difficult than the cycles seen with computers and the early Internet.”
“This is pure employment replacement.”
David Rosenberg, founder of Rosenberg Research, an economic consulting firm in Toronto, said there’s a big difference between technology that expands the economy’s productive capacity and technology that speeds up the work businesses are already doing.
AI is firmly in the latter category, he says, arguing that the changes will compress labor demand rather than create new forms of economic activity. “This is purely a job replacement,” Rosenberg said in an interview. “There are no offsetting synergies.”
He said the types of jobs most exposed to rapid replacement include research, analysis and other information processing roles. These jobs are increasingly being performed at a rate that limits the emergence of new jobs around them, reaching higher up in the white-collar workforce than entry-level positions.
In the early technology cycles, companies reorganized, new industries formed, and ultimately output increased, he said. But rather than empowering workers to do more, AI is narrowing the process by directly completing white-collar tasks.
Pain, gain, or both?
The uncertain benefits that AI can bring to businesses are reflected in the uneven benefits it pays. A new KPMG survey of 753 Canadian business leaders found that 93% say their organization is using AI in some way, up from 61% a year ago, but only 2% report seeing tangible returns from those investments.
Compared to the United States, Canada’s economy relies heavily on goods production and resource industries, which are less susceptible to white-collar replacement enabled by AI. “If we actually produce something tangible, we’ll be fine,” Rosenberg said.
of But the financial services sector here faces similar pressures as in the US
“The typical Bay Street stock analyst isn’t producing anything. They’re producing research for their bosses, and now their bosses can get it for free and within minutes.”
charting
Decrease in R&D expenses
A new report highlights historically weak investment levels in Canadian research and development. This snapshot shows an accelerated decline compared to global competitors. Due to this decline, companies are left with aging equipment and It limits the amount by which production can be increased.
Improving Canada’s investment climate was one of the steps Bank of Canada officials pointed to yesterday in a speech about the country’s “vicious cycle” of low productivity.
quotation
If you want to live longer, don’t try to change your behavior. Please change your environment.
— Dan Buettner, researcher and reporter
Residents of Lunenburg, New South Wales, and Parksville, British Columbia commonly live into their 90s and even beyond 100 years. What did they discover and how can they reproduce it?
Rebecca Haynes-Sir and her family use a shared Google Calendar and also keep an analog calendar on their refrigerator.Rebecca Haynes Sir/Provided
attention
Other files we follow
online: Today at 1pm ET, Zosia Bielski, Amberly McAteer, and Katherine Martinko answer reader questions and share tips on how to handle a packed calendar, especially as the holidays approach.
abroad: Prime Minister Mark Carney is in Abu Dhabi today to build relationships with the UAE’s large investment funds and deep-pocketed companies.
Along the border: The US ambassador to Canada said he hopes stalled trade talks between the two countries will resume, but it will be difficult for both sides to get back to the table. Idea: Place the table under a nice golden dome.
In terms of numbers: 81. (Number of days until spring training)
morning update
A rebound in relief lifted global markets after AI chip giant Nvidia reported better-than-expected earnings yesterday and traders focused on delayed U.S. jobs data released late this morning.
Wall Street futures and TSX futures also followed the rise in sentiment.
Overseas, the pan-European STOXX 600 index rose 0.9% in morning trading. Britain’s FTSE 100 index rose 0.65%, Germany’s DAX index rose 1.22% and France’s CAC 40 index rose 0.91%.
In Asia, Japan’s Nikkei Stock Average closed 2.65% higher and Hong Kong’s Hang Seng Index closed 0.02% higher.
The Canadian dollar traded at US$71.16.
