K-shaped economics has dominated the discourse lately, but the J-curve is also entering the debate amid the debate over AI’s impact on productivity.
The curve refers to the idea that general-purpose technologies like AI do not produce immediate benefits. Instead, massive investments come first, hiding early gains. It’s only after this first drop that productivity really takes off, giving rise to the J-shape. But for some, it’s not yet clear that the transformation is happening.
Apollo Chief Economist Torsten Slok joked: “AI is everywhere except in incoming macroeconomic data“, recalling Robert Solow’s famous quote about the PC revolution. Slok added that employment, productivity and inflation statistics still show no signs of the new technology. Meanwhile, profit margins and earnings forecasts for S&P 500 companies outside of the “Magnificent 7” also lack evidence of AI at work.
“Maybe there is a J-curve effect for AI, where it takes time for AI to show up in macro data. Maybe not,” he wrote in a post. note saturday.
But in a Financial Times opinion article Titled “AI Productivity Takeoff Finally Visible,” economist Erik Brynjolfsson pointed to the latest jobs report from the Bureau of Labor Statistics as evidence that the “fog may finally be clearing.”
Wednesday’s report revised the 2025 job gains figure to just 181,000, down from the initial estimate of 584,000 and the gain of 1.46 million in 2024.
Given that the economy continued to grow at a healthy pace while adding so few workers last year, with GDP up 3.7% in the fourth quarter, this suggests an increase in productivity.
Brynjolfsson said his own analysis suggests that U.S. productivity jumped about 2.7% in 2025, nearly double the 1.4% annual average seen over the past decade.
“The updated U.S. data for 2025 suggests that we are moving from this investment phase to a harvest phase where previous efforts are beginning to show up in measurable results,” he said.
Brynjolfsson, director of the Digital Economy Lab at Stanford University and a student of AI long before ChatGPT stunned the world, published a unique study of its kind last year which showed that AI was disproportionately hit entry-level workersin particular 22 to 25 year olds working in professions highly exposed to AI.
He warned that several more periods of sustained growth were needed to confirm a long-term trend in productivity, adding that geopolitical or monetary problems could reverse the gains.
But while many companies still use AI minimally, Brynjolfsson said he has found “a small cohort of power users” who are automating end-to-end workflows with AI agents, completing tasks in hours instead of weeks.
“We are moving from an era of AI experimentation to an era of structural utility,” he writes in the FT. “We must now focus on understanding its precise mechanisms. The recovery in productivity is not just an indicator of the power of AI. It is a wake-up call to focus on the economic transformation that lies ahead.”
When looking at the information and communications technology (ICT) sector, others also see clear signs that AI is driving productivity.
Stephen Brown, deputy chief economist for North America at Capital Economics, said in a note earlier this month that ICT production in the third quarter increased despite a decline in employment.
While earlier pay cuts were likely due to pandemic-related overhiring, cuts continued even as ICT sectors boomed, he added.
“All of this implies that AI makes an important contribution to productivity growth,” Brown said.