The Powerful Yet Fragile Force Propping Up Stocks and the Economy

Despite all the turmoil in the bond market, both the stock market and the broader economy appear to be reasonably strong.I pointed out one reason for this apparent anomaly last week.Oil prices and the war in Iran have driven up interest rates sharply, often dominating the financial news and causing hardship for millions of people.

But while the rates on 10-year U.S.Treasuries have hit their highest level since 2002, those rates were considered normal in the era before the financial crisis that started in late 2007.The world has certainly changed, though.

A potent but fragile force is now propping up the stock market and the economy: the artificial intelligence industry.For a measure of how important A.I.has become for the stock market, consider that the iShares U.S.

Technology ETF, an exchange-traded fund that serves as a rough proxy for A.I.-led tech stocks, returned 35.2 percent for this calendar year through Friday.That compares with 4.4 percent for the ProShares S&P 500 Ex-Technology ETF, which strips out many, but not all, of the tech stocks of the benchmark S&P 500.

A.I.’s role in the overall U.S.economy is harder to quantify, but it is substantial.Mark Zandi, the chief economist at Moody’s Analytics, told me that A.I.

accounted for a hefty chunk of the U.S.economy’s growth this year.

The latest government report says real gross domestic product grew at an annual rate of 2.3 percent in the second quarter of this year.Mr.

Zandi estimated that 0.6 to 0.7 percentage points — or perhaps 30 percent of the economy’s inflation-adjusted growth this year — came from the A.I.boom, directly or indirectly.But this may be a precarious economic foundation.Concerns about the dangers of the technology have mounted, after reports that rogue A.I.

agents hadn’t merely escaped their confines but also appeared to hide their tracks.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your ...