25. Is Artificial Intelligence Masking an Economic Slowdown?

In this episode of Rubber Meets the Road Economics, investor Hunter Craig sits down with Professor Edwin T. Burton from the University of Virginia to break down the economic realities behind the AI boom.

While tech companies are pouring billions into artificial intelligence, the rest of the economy is slowing — a trend masked by massive capital expenditures in data centers, chips, and defensive spending. Professor Burton explores whether AI is truly creating value or simply inflating numbers, what hidden distress can be found in recent bankruptcies, and how high interest rates and chaotic tariff policies are reshaping business realities.

They also discuss the Fed’s upcoming decisions, the power of the repo market, and why inflation may be sticking around longer than policymakers hope.

• The U.S. economy is weakening, except for the AI sector.
  
• Much of AI investment is “defensive” spending, not innovation.
  
• Inflated earnings depend on AI capitalization that may not be sustainable.
  
• Tariff unpredictability is wreaking havoc on global trade.
  
• The repo market, not the Fed funds rate, determines real monetary movement.
  
• Stagflation may already be here — inflation persists even as growth slows.
  
• Europe faces similar challenges as France struggles with deficits.
  
• The global economy continues to depend heavily on U.S. dollar dominance.
  

Professor Edwin T. Burton is a distinguished economist, investor, and professor at the University of Virginia. His work bridges academic insight and real-world market behavior, with deep expertise in monetary policy, investment strategy, and financial market structure. Professor Burton is known for his clear, candid approach to explaining complex economic issues — and for being unafraid to question the consensus.

• University of Virginia Department of Economics: https://economics.virginia.edu
• Federal Reserve Meeting Calendar: federalreserve.gov
  
  
  

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