Cognizant's companion study to their 'New Work, New World' report shows cautious optimism among enterprises adopting AI. The world economy is 'stuck in a low gear' with concerns about a slowdown. Plus, South Dakota economists speak on how inflation impacts the state, and an economist explains the economics behind the Olympics.
Sources:
https://www.news-journal.com/cognizant-oxford-economics-companion-study-to-their-new-work-new-world-report-shows-cautious-optimism/article_be50b9ec-6601-56de-85a9-ed431efdb545.html
https://www.wsws.org/en/articles/2024/07/30/efic-j30.html
https://www.sdpb.org/business-economics/2024-07-29/south-dakota-economists-speak-on-how-inflation-impacts-state
https://finance.yahoo.com/video/economics-behind-olympics-economist-explains-220000647.html
Outline:
(00:00:00) Introduction
(00:00:42) Cognizant & Oxford Economics' Companion Study to their "New Work, New World" Report Shows Cautious Optimism Among Enterprises Adopting AI
(00:03:22) World economy “stuck in a low gear”
(00:06:22) South Dakota economists speak on how inflation impacts state
(00:09:17) The economics behind the Olympics: Economist explains
Simply Economics
Enterprises Optimistic About AI Adoption, Global Economy Faces Slowdown
Cognizant's companion study to their 'New Work, New World' report shows cautious optimism among enterprises adopting AI. The world economy is 'stuck in a low gear' with concerns about a slowdown. Plus, South Dakota economists speak on how inflation impacts the state, and an economist explains the economics behind the Olympics.Sources:https://www.news-journal.com/cognizant-oxford-economics-companion-study-to-their-new-work-new-world-report-shows-cautious-optimism/article_be50b9ec-6601-56de-85a9-ed431efdb545.htmlhttps://www.wsws.org/en/articles/2024/07/30/efic-j30.htmlhttps://www.sdpb.org/business-economics/2024-07-29/south-dakota-economists-speak-on-how-inflation-impacts-statehttps://finance.yahoo.com/video/economics-behind-olympics-economist-explains-220000647.htmlOutline:(00:00:00) Introduction(00:00:42) Cognizant & Oxford Economics' Companion Study to their "New Work, New World" Report Shows Cautious Optimism Among Enterprises Adopting AI(00:03:22) World economy “stuck in a low gear”(00:06:22) South Dakota economists speak on how inflation impacts state(00:09:17) The economics behind the Olympics: Economist explains
- Duration:
- 12m
- Broadcast on:
- 30 Jul 2024
- Audio Format:
- mp3
[ Music ] >> Good morning, and welcome to Simply Economics. It's Tuesday, July 30th. [ Music ] On today's show, Cognizant and Oxford Economics Companion Study to their New Work New World Report shows cautious optimism among enterprises adopting AI. The world economy is stuck in a low gear. Plus, South Dakota economists speak on how inflation impacts the state. This coverage and more up next. [ Music ] I'm David, and you're listening to Simply Economics. [ Music ] We start off with a new survey from Cognizant and Oxford Economics that reveals companies around the world are cautiously optimistic about adopting generative AI technologies. The report titled New Work New World Quantifying Global Gen AI Momentum outlines how businesses across various industries and geographies are approaching this emerging technology. For more insight, we turn to our correspondent. What are some of the key findings from this survey? The survey shows that enhancing productivity is the top strategic priority for companies looking to adopt generative AI. In fact, 77% of global companies surveyed want to leverage the technology to grow revenues. Additionally, 58% are already incorporating revenue increases into their business cases for generative AI adoption. This indicates a strong belief in the potential of these technologies to drive business growth. It seems that companies are putting their money where their mouth is when it comes to generative AI. How much are they planning to invest? According to the survey, companies plan to invest an average of $47.5 million in generative AI this financial year. Most of this funding is expected to come from IT and technology budgets with contributions also coming from marketing and R&D departments. This significant investment demonstrates the growing importance of generative AI in the eyes of business leaders. With any new technology, there are often concerns about its impact on the workforce. How are companies addressing this issue? The survey highlights a commitment to workforce transformation in the face of generative AI adoption. 54% of companies plan to upskill their workers to address skills gaps, while 44% are seeking to transition displaced workers to new roles within the organization. This suggests that businesses are taking a proactive approach to managing the potential disruption caused by generative AI. Despite the optimism and investment, it seems that companies are still cautious about fully embracing generative AI. What does the survey reveal about the current state of implementation? While businesses are eager to explore the potential of generative AI, they are indeed proceeding with caution. The survey found that only 26% of enterprises have implemented cross-enterprise use cases for the technology. This indicates that while interest is high, most companies are still in the early stages of adoption and are carefully evaluating how best to integrate generative AI into their operations. It's clear that generative AI is a hot topic in the business world, with companies across the globe investing heavily in the technology. However, as with any emerging technology, there are still challenges to overcome and considerations to be made before widespread adoption can occur. As more companies explore the potential of generative AI, it will be interesting to see how it shapes the future of work and business growth. On a different note, new data released last week shows that hopes for a recovery in the Eurozone economy in the second half of this year have taken a significant hit. The Purchasing Managers Index, or PMI, compiled by S&P Global, fell to a five-month low, barely above the level indicating the boundary between expansion and contraction. This was mainly due to weaker growth in services and declines in manufacturing in Germany, the region's largest economy. For more on this, we turn to our economics correspondent. What stood out to you most in this latest PMI report? The results out of Germany were particularly concerning and weaker than most economists had forecast. The German PMI reading fell to a four-month low, signaling a contraction in the country's business activity. German factory output declined at the fastest rate in nine months. One economist at Commerce Bank said these weak figures put a question mark over the noticeable economic recovery that many forecasters had been expecting for the second half of the year in the Eurozone. Other economists used even stronger language to describe the troubling data out of Germany. Correct? What were some of their reactions? That's right. An economist at Hamburg Commercial Bank said the sharp fall in German manufacturing looks like a serious problem. He noted a steep and dramatic drop in manufacturing output. The chief economist at that same bank said it's unsettling how steadily companies are slashing jobs month after month. Another economist warned that the Eurozone could slide back into contraction after some limited growth earlier in the year, saying Germany's underperformance since the energy crisis is persisting. European central bank President Christine Lagarde also sounded a cautious tone in her recent remarks, didn't she? What was her assessment of the risks to the economic outlook? President Lagarde said the risks to economic growth are tilted to the downside. She noted that manufacturing has declined in recent months and investment remains weak. Her comments came as the ECB made the decision to hold interest rates steady earlier this month, but it's not just the Eurozone facing economic challenges. Globally, growth is predicted to reach just 3.2% this year and 3.3% in 2025, well below the average in the two decades before the pandemic. The head of the IMF recently said the global economy is stuck in a low gear amid a sobering outlook. Certainly a lot of red flags in this latest round of economic data and projections. It sounds like the hope for rebound in the second half of the year in Europe and beyond is looking increasingly unlikely. Thanks for breaking this down for us. We'll continue to monitor the situation closely. Now, let's shift our focus to the U.S., specifically South Dakota, where inflation has been a major concern for many residents. The state has seen significant increases in the cost of living, particularly in the housing market. To discuss the impact of inflation on South Dakota, the Downtown Sioux Falls Rotary Club recently invited two economists to share their insights. Here with more details is our simply economics correspondent. Can you tell us about the main points these economists made regarding inflation in South Dakota? The two economists, Reynolds Nisibah, a professor of economics at Augustana University and a South Dakota state senator, and Joe Santos, the director of the Nest School of Management and Economics at South Dakota State University, focused on how inflation has affected different aspects of the state's economy. Nisibah specifically highlighted the housing market, noting that while homeowners have benefited from rising property values, renters have faced significant challenges as rental prices have increased, forcing some to seek more affordable options outside of desirable areas like downtown Sioux Falls. It seems like the housing market has been particularly volatile in the face of inflation. Did the economists provide any insights into why this might be the case? Santos addressed this issue from a macroeconomic perspective. He explained that even though inflation causes a general increase in prices across the board, some sectors, like housing, may experience more rapid price increases than others. This uneven impact of inflation can lead to firms making decisions about their production processes based on the relative prices of inputs. In other words, the housing market is not only affected by the overall decrease in the purchasing power of money, but also by the specific dynamics of supply and demand within the sector. Given these challenges, did the economists offer any predictions or solutions for addressing inflation in South Dakota, particularly in the housing market? Santos emphasized that the issue of inflation in housing is a long-standing one that will require time and effort to address, even in South Dakota. While neither economists provided specific solutions during their presentations, their insights highlight the need for policymakers and industry leaders to carefully consider the uneven impacts of inflation and develop targeted strategies to support those most affected, such as renters facing rising costs in the housing market. It's clear that inflation remains a significant concern for many South Dakotans, and the insights provided by these economists underscore the complexity of the issue, particularly in the housing sector. As policymakers and industry leaders work to address these challenges, it will be crucial to keep the uneven impacts of inflation in mind and prioritize support for those most affected. On a related note, let's shift our focus to the economics of the 2024 Paris Olympics. The Paris Organizing Committee reports that nearly $10 billion has already been spent on the games, but does that figure truly represent the total cost of hosting the Olympics? Here to provide some insight is simply economics correspondent Bella. So tell us how accurate are these reported costs of hosting the Olympics? Well, David, according to Smith College Professor of Economics Andrew Zimbalist, the reported costs from Olympic organizing committees should be taken with a large grain of salt. He says the numbers are often fungible, depending on what expenses the committee chooses to include or exclude from their official budgets. So the true total cost is likely even higher than the $9.7 billion figure cited for the Paris Games. Given how enormous the price tag is for hosting the Olympics, what are some of the long-term economic impacts on the host cities? Are they generally prepared to handle the costs? In many cases, the answer seems to be no. While hosting the Olympics does bring an influx of tourism and attention to the host city, it also requires massive investments in infrastructure, venues, security and more. And those costs often fall on the host city and country to bear long after the games are over. Many host cities end up with expensive, highly specialized venues that have limited use beyond the Olympics and fall into disrepair. So with fewer and fewer cities willing or able to shoulder the enormous costs, what are the alternatives? How could the Olympics adapt going forward? Professor Zimbalist suggests it may be time for the International Olympic Committee to stop seeking out new host cities every four years. Instead, he proposes establishing permanent homes for the summer and winter games. That would allow the necessary infrastructure and venues to be maintained and reused over the long-term. It's an interesting idea that could help make the Olympics more economically sustainable, but it would certainly be a major shift for the games. It will be interesting to see if the International Olympic Committee considers that kind of change in the years ahead as the costs of hosting continue to skyrocket. Thank you, Bella, for that insightful analysis of the economics behind the Olympic Games. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. (gentle music) [BLANK_AUDIO]