Artificial Intelligence and Its Potential Effects on the Economy and the Federal Budget

Artificial intelligence (AI) refers to computer systems that can perform tasks that have traditionally required human intelligence, such as learning and performing other activities that require cognitive ability. A general attribute of AI is its ability to identify patterns and relationships and to respond to queries that arise in complex scenarios for which the precise computational algorithm that is needed cannot be specified in advance.

Because AI has the potential to change how businesses and the federal government provide goods and services, it could affect economic growth, employment and wages, and the distribution of income in the economy. Such changes could in turn affect the federal budget. The direction of those effects—whether they increased or decreased federal revenues or spending—along with their size and timing, are uncertain. Some budgetary effects could occur relatively quickly, whereas others might take longer. In this report, the Congressional Budget Office provides an overview of the channels through which the adoption of AI could affect the U.S. economy and the federal budget.