Could AI eventually make things cheaper?

At the beginning of the week, we reported that economists are forecasting that AI is likely to cause prices to rise over the course of the next year.

Sure enough, on Thursday, both Microsoft and Apple said they are raising prices on Xbox consoles and certain kinds of MacBooks and iPads.

“The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage,” a statement from Apple reads. “We have never seen a component price increase this much, this quickly.”

But while it may be small comfort to consumers who are paying more for their devices now, there’s an expectation that AI will, eventually, boost productivity and actually ease inflation.

Alan Detmeister, senior economist at the bank UBS, said there could come a time where AI allows lawyers, for instance, to become more productive and handle more cases at once.

“So what do you do? You probably lower your prices a little bit,” he said.

That would push down inflation. Detmeister said that lower price means more people could afford to hire that hypothetical lawyer, who would make more money because they doubled their workload.

“So, in this case, everybody wins,” he said.

That kind of rosy scenario depends on workers using artificial intelligence. (Not to mention the lawyer deciding to lower their prices of their own accord.) But the adoption of those tools in the workplace has been gradual, said Gil Luria, head of technology research at the investment firm D.A. Davidson.

“Part of it is that if somebody used an AI tool to try to do work… two years ago, they probably didn't get a great result, and so some people got discouraged, and they may not be trying it anymore,” he said.

It’s also not clear exactly how productive AI will make us, or when. Tech historian Margaret O’Mara at the University of Washington said we can learn from the advent of the digital age in the last century.

“Sort of similar to now, there was a lot of heralding the internet as this extraordinary and transformative technology,” she said. “By the end of the 1990s, it wasn't quite delivering on all those promises.”

But the internet has turned out to be kind of a big deal, and the same could be true for artificial intelligence. It could make a whole lot of things cheaper — but it might take a minute or two.