4 MINUTE READ | January 20, 2023
Generative AI Steals the Show at World Economic Forum
Abby Long is the Senior Managing Editor at PMG.
2023 is off to a busy start, marked by the kickoff of the earning season and the release of new economic data, just as global policymakers and business leaders gathered this week for the World Economic Forum (WEF) in Davos, Switzerland.
Generative AI stole the show at the annual WEF meeting, as the rapid adoption of ChatGPT demonstrates the impressive advancements being made across AI services.
Earnings season has kicked off in earnest, with leading financial institutions reporting in recent days. Economists forecast the U.S. will tilt into a ‘mild’ recession in 2023 as recessionary forces and market volatility weigh down the broader economy. Despite some gloomy outlooks, many analysts see positive signs that show a ‘soft landing’ is possible in the months to come.
December retail sales data showed a 1.1 percent decline year-over-year, though analysts from the National Retail Federation shared that the dip was likely due to holiday spending being pulled forward earlier in the season rather than dampened consumer demand.
More than 2,700 leading economists, government officials, and global executives are gathered in Davos, Switzerland, for the WEF annual meeting to discuss the biggest economic challenges and opportunities characterizing the current global economic climate. A packed agenda featured sessions on topics ranging from navigating economic challenges to philanthropic initiatives that are solving issues of inequality and more.
As reported by Axios, “Everyone wants to talk about the latest crops of generative AI tools, from how they are experimenting with it personally to how they see it reshaping their businesses and lives.”
In Davos, Microsoft CEO Satya Nadella spoke highly of the rapid advancements, personalization, and sophistication of generative AI in a session with WEF chairperson Klaus Schwab. Nadella called early 2023 the “ChatGPT moment,” as the newest generation of AI is a platform shift that is capturing the imagination of everyone from business leaders to students and “making a real difference” in people’s lives. His comments were made as speculation swirls that Microsoft would take a larger stake in OpenAI with significant capital investments in the coming weeks. In recent days, Microsoft officially announced plans to integrate ChatGPT and broaden access to the tool via the Azure OpenAI Service program.
Apart from generative AI, popular topics among attendees included the art of navigating volatility and recessionary forces, growing polarization, and solving global trade challenges. While many speakers throughout WEF outlined their leading theories for what the future holds for the global economy, earnings reports and the latest retail sales data from this week shed light on how consumers are showing continued resiliency despite prolonged economic anxiety.
Citigroup, JPMorgan Chase, and Wells Fargo, to name a few, kicked off the earnings season this week, with most of the banks beating expectations. Across balance sheets in consumer banking divisions, excess deposits are in decline, and consumers appear to be financing more of their spending. On calls with analysts and investors, finance leaders from Bank of America, Citigroup, and others showed a consistent 2023 outlook. Many predicted the U.S. economy would tilt into a ‘mild’ recession in 2023. However, trends like fading inflation, a swift reopening in China, and record-low unemployment rates, are raising hopes that a ‘soft landing’ is more than possible.
The National Retail Federation (NRF) recently announced that 2022 November-December holiday retail sales grew 5.3 percent year-over-year to $936.3 billion, missing forecasts for six to eight percent growth. While the Commerce Department reported this week that December 2022 retail sales fell a seasonally adjusted 1.1 percent, NRF economists suggest the decline in December sales was likely more due to early shopping pulling spend forward rather than dampened consumer demand.
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“We knew it could be touch-and-go for final holiday sales given early shopping in October that likely pulled some sales forward plus price pressures and cold, stormy weather,” said NRF Chief Economist Jack Kleinhenz in the latest NRF report. “The pace of spending was choppy, and consumers may have pulled back more than we had hoped, but these numbers show that they navigated a challenging, inflation-driven environment reasonably well. The bottom line is that consumers are still engaged and shopping despite everything happening around them.”
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