AI might create 'Ghost GDP'—where the economy looks like it's growing on paper, but nobody actually has any money to spend.
March 27, 2026
Original Paper
Abundant Intelligence and Deficient Demand: A Macro-financial Stress Test of Rapid AI Adoption
SSRN · 6349718
The Takeaway
Because our financial institutions are built on the assumption that human labor is scarce, AI-generated abundance creates a paradox where supply skyrockets but demand collapses. This creates a wedge between measured output and actual spendable income, potentially triggering a collapse in the $13 trillion mortgage market as high-earning 'exposed' workers lose their consumption power.
From the abstract
We formalize a macro-financial stress test for rapid AI adoption. Rather than a productivity bust or existential risk, we identify a distribution-and-contract mismatch: AI-generated abundance coexists with demand deficiency because economic institutions are anchored to human cognitive scarcity. Three mechanisms formalize this channel. First, a displacement spiral with competing reinstatement effects: each firm's rational decision to substitute AI for labor reduces aggregate labor income, which r