Artificial intelligence might be the most instantly unpopular emerging technology in modern history. Why? Off the top of my head, I suppose one could blame the rise of tech pessimism, the emergence of anti-billionaire politics, the fallout from disappointments of the social media age, the demonization (sometimes fair, sometimes unfair) of data centers, growing distrust of corporations in general, or the fact that people don’t appreciate being told that a new product is going to disemploy their children and destroy the world, while its architects become billionaires.

All fair. But there’s another reason that these explanations overlook.

For years, AI’s builders said that their technology would create an abundance of cheap stuff. In 2021, Sam Altman predicted that powerful AI would give us “Moore’s Law for Everything, and “the price of many kinds of labor” would fall toward zero, pulling down the cost of goods and services. Marc Andreessen imagined that powerful AI would “save the world” by making “everything we care about better” and maybe drive prices “across the board to virtually zero.” Many of AI’s builders, including Dario Amodei and Altman, anticipated that the plunging price of superintelligence would be so dramatic that millions of jobs would disappear.

But AI’s reality is the opposite of the forecast. AI has not caused mass unemployment in a period of plunging prices. Instead, everybody has a job, and everything is getting more expensive.

This is one of those facts that is both obvious and far stranger than most people seem to appreciate. Americans are miserable about the cost of living, and the Conference Board measure of consumer confidence just hit its lowest mark since 2014. Year after year, Americans scream at their politicians: “Would you please just do something to make life more affordable?” And meanwhile, the AI buildout is not only minting a generation of billionaires; it’s doing so by directly pushing up prices across the economy.

You do not have to pick a side—pro or anti-AI—to see the irony here: a project broadly predicted to reduce prices and create post-material abundance is instead raising prices and showing everybody just how materially finite some parts of the economy are.

Below, for paying subscribers, I’ll explain exactly how AI is contributing to higher prices, how this period of inflationary AI might end, and why I think it’s so useful to think about what AI is actually doing in the economy right now rather than merely forecast what it might do in various imagined futures.