U.S. economic growth has shown resilience despite the Federal Reserve’s successive rate hikes, leaving the fed funds rate at a 22-year high. An Ark Invest analyst, however, believes growth will likely accelerate further, thanks to the impact of transformative technologies.
What Happened: In Ark Invest’s weekly Innovation newsletter, Chief Futurist Brett Winton predicted real GDP growth could reach 7% annually on average in the current business cycle, surpassing the rate seen in any year since 1950.
In 2023, the U.S. economy expanded at a year-over-year rate of 2.5%, an acceleration from 2022’s 1.9% growth but slower than the 5.8% growth in 2021.
“Seemingly outlandish, this estimate is consistent with the dramatic boost to real GDP growth during bursts of technologically enabled innovation in the past 2000+ years,” he said. He noted that since 1st century AD, history has shown distinctive time periods when the economic growth rate transformed structurally. One way to measure the impact is to see how long it would have taken for the world’s production to grow tenfold, he said.
The technology breakthroughs the analyst enumerated are:
- 1000 AD – development of waterwheel and advanced infrastructure enabled by concrete (10x times growth would have been possible in 16,500 years)
- 1500 AD – agricultural innovation, notably the introduction of the plow, boosted food production (ten-fold growth in 1,650 years)
- During the Enlightenment & First Industrial Revolution: the introduction of the steam engine was followed by the internal combustion engine, telephone, electrification, and railroad (ten-fold growth in 150 years)
- Second half of the 20th Century and early 21st Century: integrated circuits, personal computers, and the internet (ten-fold growth in less than 65 years)
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Ark Optimistic: The consensus forecasting agencies, Winton said, were implying that “innovation enabled by robotics, energy storage, artificial intelligence, blockchain technology, and multiomics sequencing will not impact growth meaningfully and that the global economy is entering a rendition of the dark ages”
“Consistent with techno-economic history, ARK's forecast through 2030 suggests that the time to 10x will be ~30 years, nearly three times faster than the consensus forecast,” he said.
A subset of the 14 technologies that Ark has modeled could deliver the acceleration in real GDP growth, he said, adding that merely adaptive robotics and robotaxis alone could realize almost all of the transformational acceleration the firm is modeling.
“Other advances—notably in AI software, public blockchains, and multiomics—also could prove transformational for the economy,” Winton said.
The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund tracking the S&P 500 Index, rose 0.07% to $506.33 in premarket trading on Tuesday, according to Benzinga Pro data.
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