Goldman Sachs Sees AI Boosting US Manufacturing Productivity

Goldman Sachs has identified a potential catalyst that could reverse the stagnant productivity in US manufacturing, and it is not tariffs. According to a note to investors, the banking giant suggests that advancements in artificial intelligence (AI) hold significant promise for boosting US manufacturing productivity. Goldman analysts, including Joseph Briggs, highlight that a surge in innovation, particularly from recent developments in robotics and generative AI, could be the key to reversing the long-term stagnation in manufacturing productivity.

The analysts argue that tariffs, which have been a central policy of the Trump administration, are unlikely to achieve the desired reshoring of manufacturing jobs to the US. They point out that production costs in other countries remain significantly lower than in the US, even after accounting for tariffs. Additionally, China's cost advantages and industrial policy support are expected to continue driving its export growth. Briggs emphasizes the importance of advancing factory automation as a critical technology that could drive productivity growth in a cost-competitive manner. However, he notes that this has not yet occurred on a meaningful scale.

Goldman Sachs' perspective underscores the need for a strategic focus on technological innovation rather than relying on tariffs to stimulate manufacturing productivity. The analysts' view aligns with the broader consensus that technological advancements, particularly in AI and automation, are essential for enhancing manufacturing efficiency and competitiveness. This analysis suggests that policymakers and industry leaders should prioritize investments in AI and automation to drive long-term productivity gains in the US manufacturing sector.