Good morning. This year’s Nobel prize in economics captures the unfolding dynamics behind the economic impact of AI, which is likely just getting started.

For most of human history, economic stagnation was the norm, the Nobel committee noted today. Important discoveries sometimes led to improved living conditions and higher incomes, but growth “always eventually levelled off.” That changed about 200 years ago, as people developed new ways to understand why a particular innovation boosted growth.

Two of the winners, Philippe Aghion and Peter Howitt, published an article in 1992 that explained a mathematical model for the dynamic of creative destruction that occurs when a new and better product displaces older ones.

“The laureates’ work shows that economic growth cannot be taken for granted,” and people “must uphold the mechanisms that underlie creative destruction,” lest stagnation take hold, the committee said.

Highlights from the WSJ story:

With the world economy once again facing potentially significant technological change in the form of artificial intelligence, Aghion said the predictions of widespread unemployment offered up by critics of change in the past haven’t proved to be well founded.

“It never happens,” he said.

It can take years for people to figure out how to get value out of technological innovation, the internet included. AI investments are “juicing” the economy, even though “the tools themselves aren’t substantially boosting the productivity of American workers in the way AI enthusiasts hope they will—at least not yet,” the WSJ’s Justin Lahart says. See more below.

The bewilderingly massive investments by OpenAI and other companies reflect a belief that AI is unleashing a massive wave of just such creative destruction.

“We are going to spend a lot on infrastructure, we are going to make a bet, the company scale bet that this is the right time to do it,” OpenAI CEO Sam Altman said last week on the Stratechery podcast. 

“Given where we are with the research, with our business, with the product … is it the right decision or not? We will find out, but it is the decision we’re going to make,” Altman said.

Are there signs that AI will boost your company’s productivity? Use the links at the end of this email and share your observations.

Outside of tech, no apparent relationship between AI use and slower employment growth, says one economist report.

In a recent analysis of Labor Department data, the Yale Budget Lab found that while there is evidence that some early-career workers have been displaced by AI since OpenAI introduced ChatGPT in November 2022, the effect is small.

No ChatGPT bump. In the three months ended November 2022, the share of U.S. workers who were in occupations that are highly exposed to ChatGPT was around 18.2%. In the three months ended in August of this year, that share was close to unchanged at 18.3%.

The Budget Lab did find changes in the occupational mix for recent college graduates. But those workers represent a slim slice of overall U.S. employment. Only about a quarter of America’s roughly two million software developers are under 30, while total U.S. employment stands at around 163 million people.

Looking ahead, AI adoption could widen the chasm between top performers and everyone else.

While this may be good news for superstars, it’s problematic for companies, says research author Matthew Call, an associate professor in the department of management at Texas A&M University’s Mays School of Management.

AI-amplified performance gaps will intensify the workplace tensions and resentment that stars can sometimes create, undermining team cohesion. Here's how companies can help  level the field, according to Call.

• Encourage everyone to experiment with AI. 
• Invest in AI-literacy training that goes beyond basic tool usage
• Train average performers to adopt work habits that will enable them to get the most from AI. 
• Redesign employee-evaluation systems to account for AI-augmented work, establishing clearer guidelines about AI disclosure. 

China goes all in on U.S. trade battle, hitting U.S. tech

China’s Commerce Ministry on Thursday said that it was placing new restrictions on rare-earth materials, specifically noting that licenses related to certain types of chips.

Beijing on Friday followed that up with the announcement that it had launched an investigation into Qualcomm for suspected violation of the country’s antimonopoly law. The probe is tied to Qualcomm’s acquisition of Autotalks, an Israeli startup, the regulator said.

Behind the tit for tat: Chips, says WSJ. Their central role in AI, military equipment and other areas with national-security and economic significance has made them the locus of tensions. Beijing is looking for the U.S. to remove tariffs, as well as various tech restrictions that have constrained Chinese companies and the broader economy.

Meanwhile JPMorgan Chase said Monday that it would directly invest $10 billion in companies it deems critical to U.S. national security. That includes AI companies as well as those involved in rare earths.

Andrew Tulloch, co-founder of Mira Murati’s Thinking Machines Lab has left to join Meta Platforms, WSJ reports. Tulloch, a leading researcher in the field, and previously worked at Meta for 11 years. He left in 2023 to join OpenAI for a stint before co-founding Thinking Machines Lab alongside Murati, OpenAI's former CTO, at the start of this year.

All 20 remaining hostages alive in Gaza returned to Israel after being released by Hamas, closing a chapter in the two-year war, as President Trump arrived at the country's parliament to a warm welcome ahead of his address. (WSJ)

Prospects for U.S. economic growth are looking up, as investment in artificial intelligence booms and risks around tariffs diminish, according to economists surveyed by The Wall Street Journal. (WSJ)

General Motors’ bold bet on rare-earth magnet production in the U.S. is paying off as China tightens its grip on magnet exports. (WSJ)

With gold prices reaching record highs, amateur prospectors are buying picks and dreaming of stumbling on the motherlode. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.