The irony of AI being "deflationary":
Electricity consumption has skyrocketed, and this is just the beginning.
The surge in electric cars, electric heating, and new AI advancements is dramatically increasing our electricity needs.
The global economy is not prepared for… pic.twitter.com/Vi0m7zU0Mc— Otavio (Tavi) Costa (@TaviCosta) June 27, 2024
In absolute terms, the growth in electricity demand from EVs and data centers, is equivalent to the total electricity demand of a country such as Turkey, that the US has to take on. -Rystad via Oilprice pic.twitter.com/cKV1HMvIAc
— Tracy (𝒞𝒽𝒾 ) (@chigrl) June 27, 2024
Inflationary Pressures from AI Adoption:
- As AI technologies are adopted, there is an initial surge in demand for infrastructure, hardware, and skilled labor. This can lead to inflationary pressures. For example:
- Electricity Consumption: AI models, especially deep learning models, require significant computational power. As more organizations deploy AI, electricity consumption increases.
- Hardware Expansion: The extensive infrastructure needed to support AI—such as data centers, GPUs, and specialized hardware—can drive up costs and contribute to inflation.
- Labor Costs: Hiring skilled AI professionals and data scientists can also lead to wage inflation.