The K-shaped economy has dominated discourse lately, but the J-curve is entering the chat too amid debate over AI’s impact on productivity.
The curve refers to the idea that general-purpose technologies like AI don’t produce immediate benefits. Instead, massive investment comes first, obscuring early gains. It’s only after this initial dip that productivity really takes off, resulting in the J shape. But for some, it’s not clear yet that the transformation is happening.
Apollo Chief Economist Torsten Slok quipped that “AI is everywhere except in the incoming macroeconomic data,” recalling Robert Solow’s famous quote about the PC revolution. Slok added that employment, productivity and inflation stats are still not showing signs of the new technology. Meanwhile, profit margins and earnings forecasts for S&P 500 companies outside of the “Magnificent 7” also lack evidence of AI at work.
“Maybe there is a J‑curve effect for AI, where it takes time for AI to show up in the macro data. Maybe not,” he wrote in a note on Saturday.
But in a Financial Times op-ed titled “The AI productivity take-off is finally visible,” economist Erik Brynjolfsson pointed to the latest jobs report from the Bureau of Labor Statistics as evidence that the “fog may finally be lifting.”
Wednesday’s report revised the reading on 2025 job gains to just 181,000, down from an initial print of 584,000 and from 2024’s gain of 1.46 million.
Given that the economy continued to expand at a healthy pace while adding so few workers last year, with fourth-quarter GDP tracking up 3.7%, that suggests a surge in productivity.
Brynjolfsson said his own analysis suggests U.S. productivity jumped roughly 2.7% in 2025—nearly double the 1.4% annual average seen over the past decade.
“The updated 2025 US data suggests we are now transitioning out of this investment phase into a harvest phase where those earlier efforts begin to manifest as measurable output,” he said.
Brynjolfsson, who is director of Stanford University’s Digital Economy Lab and has been studying AI since before ChatGPT stunned the world, published a first-of-its-kind study last year that showed AI was hitting entry-level workers disproportionately, especially those ages 22 to 25 in highly AI-exposed professions.
He cautioned that several more periods of sustained growth are need to confirm a long-term trend in productivity, adding that geopolitical or monetary snafus could offset advances.
But while many businesses are still using AI in minimal ways, Brynjolfsson said he’s found “a small cohort of power users” who are automating end-to-end workstreams with AI agents, completing tasks in hours instead of weeks.
“We are transitioning from an era of AI experimentation to one of structural utility,” he wrote in the FT. “We must now focus on understanding its precise mechanics. The productivity revival is not just an indicator of the power of AI. It is a wake-up call to focus on the coming economic transformation.”
When looking at the information and communication technology (ICT) industries, others also see clear signs that AI is boosting productivity.
Stephen Brown, chief deputy North America economist at Capital Economics, said in a note earlier this month that ICT output during the third quarter rose despite a drop in employment.
While earlier payroll cuts were likely due to overhiring in the pandemic, reductions have continued even as ICT sectors have boomed, he added.
“All this implies that AI is making a large contribution to productivity growth,” Brown declared.
