To The Moon

Cathie Wood's ARK Investment Management researcher Brett Winton has made an interesting case of a discontinuous change to the rate of economic growth, which gives a different picture of the world GDP growth forecast when technology is taken into account.

Discontinuous changes to the rate of economic growth are the norm rather than the exception when measured across appropriate time scales. Consensus expects decaying economic growth; this runs counter to economic history," Winton, the chief futurist at ARK, said in his tweet.

What It Means: Discontinuous change, according to a Harvard lecture, is a sharp (but fuzzy) change that impacts lives in important ways, as opposed to the marginal changes in prices and quantities that much of standard economics focuses on.

The lecture notes further explain how standard marginal economics is ill-suited to dealing with big discontinuous changes.

GDP Growth: Winton explained through a chart how the global real GDP growth by 2040, according to the consensus forecast, stands at just 2.6% while the GDP growth forecast consistent with technological history comes in at 8.5%.

The difference is eye-popping. If general consensus is to be believed, global real GDP would amount to $160 trillion in 2040 as against a whopping $470 trillion when projections are made consistent with technological history. The chart shows that the per capita forecast for 2040 comes in at $51,000 as against $18,000.

As these technologies stack, we believe they are going to yield profound productivity advances. Though many don't recognize it, a profound inflection in the rate of growth would be consistent with technological economic history," Winton explained.

Confounding Statistics: He further highlighted that the timing of the change in the rate of growth could be tricky. "In robotics and robotaxi-driven energy storage alone—areas where productivity advances are more likely to be captured in GDP—our modeling suggests that the discontinuous growth trajectory is likely this decade," he said.

Disruptive technology, however, could confound macroeconomic statistics, and though the strongest productivity advances are likely to feed through AI, it's less clear how the deflationary growth that AI yields will appear in traditional measurements of output, he argued.