Without AI, Our Economy Dies
I travel light.
When I travel alone, that is.
When my wife and daughter are with me, it’s an entirely different story. We need an army quartermaster to organize and move our luggage.
Such is how I found myself stuck in an hour-long line in the Amsterdam airport. Checking a bag there is a nightmare. The line snakes around the desks and spills out into the walkway.
Why is that?
Because there are no workers to help you.
You have to scan your boarding pass in order to print out your baggage tickets, which you then affix yourself. Then you have to navigate a machine that weighs your bag and moves it onto the conveyor belt.
Because passengers don’t do this every day, it’s a slow process. It’s even slower if there are a lot of older passengers in the line.
It's miserable.
No one enjoys it.
Unfortunately, we should expect to see a lot more of this because the personnel to help speed things along were never born.
Birthrates in the West have been low for decades. In 1960, American women had 3.7 kids on average. In France and the United Kingdom, they had close to three each.
But then, birthrates collapsed in the late 1960s and 70s and have never really recovered.
Today, women in all three countries give birth to just 1.6 babies on average. We’re now starting to see what a real worker shortage looks like.
And it’s about to get a lot worse.
Today, I’ll dig through the numbers to show you what our future may look like… and how physical AI might be our only solution at this point. Then I’ll show you how, as an investor, you can take advantage of this now unstoppable trend.
Catastrophic Demographic Future
Between now and 2060, the working age population of the United States (defined here as 20 to 64) will grow by a whopping 6%.
Not 6% per year.
Six percent, cumulatively, over the next 35 years.
And these estimates were compiled before President Trump made it a priority to deport a million immigrants per year. Reducing immigrants (and their future would-be children) may actually push that number negative.
It’s bad in the U.S.
It’s downright catastrophic in most of the rest of the West.
France and the Netherlands will see their working age population shrink over the next three and a half decades.
Germany, Spain, and Italy will see their workforces implode.
Germany’s working age population is set to decline by 22%. Spain’s by 30%. Italy’s by 34%.
This is not a wake-up call. It’s far too late for that. The demographic math is already baked in.There’s nothing left to do.
Even if German, Spanish, or Italian women all started having children at early 1960s rates, we wouldn’t see any benefit for 20 years. And in the short-term, a massive surge in pregnancies would actually reduce the workforce further as the mothers took maternity leave and even some of the fathers took paternity leave.
There Are Only Three Ways to Grow an Economy
If you ever had to sit through a college economics class, you might remember the Cobb-Douglass Production Function. It’s a simple model that breaks down the economy into three component parts:
Total Output (GDP) = Capitalα * Labor(1-α) * Total Factor Productivity
In plain English, this means that the economy is a product of capital (machinery, tools, factories, infrastructure, etc.), labor, and productivity.
You can grow the economy by throwing workers at it, by building new capital, or by squeezing more productivity out of the workers and capital you already have.
Well, we’re now steadily losing the labor part of that equation. In fact, a lack of new workers will be a major drag on growth.
We could, at least in theory, get a bump from major new capital investments.
Just this week, Apple pledged to invest $600 billion in new capital spending over the next several years, and similar eye-popping headlines seem to spring up every week.
Unfortunately, capital spending will only get you so far if you don’t have the workers to man all of those shiny new factories you’re building.
And remember, the United States (and most of the developed world) is mostly a service-based economy. Capital spending matters much less for knowledge and service-based jobs. There’s no such thing as a “law factory” or “accounting factory,” and most white collar workers can work just as easily from their living rooms.
That leaves productivity.
The only way we can hope to generate meaningful economic growth is to get a lot more productivity out of each worker.
That’s where AI comes in.
In particular, “physical AI,” or robotics.
We need AI to take the place of the millions of workers who were never born.
And we’re already seeing this play out in the real world, as macro and tech investing mastermind Eric Fry explained yesterday.
We Need Robots to Take Over Soon
Thanks to AI, robots are now stepping off the screen and into the real world – and taking over physical tasks once reserved for humans.
This shift will reshape entire industries… and reward those who get in position early.
AI researchers are making shockingly rapid advancements in android or human-like robotics.
Last year, a group of researchers at the University of Tokyo demonstrated a human robot that could drive a car around a corner.
And advancements in chipmaking have finally made it possible to train and test humanoid robots at scale.
Amazon (AMZN) has committed around $25 billion toward next-gen robotics-operated fulfillment centers this year. It has launched its DeepFleet, a generative AI-based system that coordinates robotic fleet movements. And it’s unveiled Vulcan, an advanced tactile robot capable of identifying and retrieving items by touch.
Automation is another component… helping companies produce without as many workers.
For example, Kimberly-Clark – the producer of things like Huggies diapers and Kleenex tissues – has announced a $2 billion investment over five years across its U.S. manufacturing network. It plans to incorporate industrial automation and advanced manufacturing technologies in a new facility in Warren, Ohio.
Prepare for “Day Zero”
From fully automated “dark factories” (meaning the factory isn’t lit because no one needs to see anything) in China that churn out a smartphone every second to U.S. warehouses running 24/7 with minimal human oversight… we are witnessing the first wave of a global transformation.
To that end, Freeport Society co-founder Louis, Eric, and Luke have created a seven-stock portfolio to include the best Physical AI and robotics stocks to own today as this new era begins.
An era – as I demonstrated above – can’t come soon enough.
They call it the Day Zero Portfolio.
Recently they got together to film a special free broadcast to talk all about it. You can catch that here… and get one of their seven stocks as a free pick.
To life, liberty, and the pursuit of wealth,
Charles Sizemore