Adriana Kugler

A geopolitical shock in one region can move through energy, fertilizer, and food markets before reaching households on the other side of the world. What I observed at the World Bank made that chain of effects impossible to overlook. Some economic shocks remain close to where they start. Others spread far beyond their point of origin. The Russian invasion of Ukraine clearly fell into the second category, and it became an important part of understanding the inflation that followed. The most immediate cost was human, marked by the loss of innocent lives and the destruction of infrastructure across Ukraine. Yet the economic effects spread well beyond the region, reaching countries far removed from the conflict. I was serving as the U.S. Executive Director at the World Bank during this period, a position that made the global transmission of the shock especially clear in a way that broad statistics alone could not fully convey. Energy, fertilizer, and the chain reaction The first transmissi...

Adoption headlines suggest a technology sweeping through the economy. The harder question is whether companies are building anything new with it, because that is what actually shows up in growth. Here is a number you have probably seen some version of: roughly one in five firms and businesses are now adopting AI, according to Census data . It sounds like a technology spreading fast. And in a sense, it is. But adoption figures answer the easy question, the one about whether companies have brought the tool in the door. They say nothing about the harder and more important question, which is what those companies are actually doing with it once it arrives. That second question is the one I care about, because it is the one that decides whether all this activity adds up to a stronger economy. A tale of two adopters Imagine two companies that both report adopting AI. They look identical in the statistics. The first uses AI to trim expenses. It automates a few routine tasks, speeds up some pap...

Making a powerful technology cheaper does not always shrink demand for it. Often it does the opposite, and that pattern is worth keeping in mind as the cost of running AI falls. Most coverage of artificial intelligence focuses on what the technology can do. The figure I keep coming back to is a quieter one: what it costs to run. That number, more than any single capability, will shape how far AI spreads and how much it ultimately changes the economy. The number behind the question There are estimates suggesting that the cost of processing for a model with one trillion parameters could fall by roughly 90 percent by 2030. That is not a modest discount. It is the price of a powerful capability dropping to a tenth of what it is today. The instinct, when a price falls like that, is to assume spending on it falls too. Cheaper AI, lower AI bills, end of story. But that instinct is usually wrong, and the reason has a name. Efficiency does not lead to thrift It is called the Jevons paradox: im...

Higher prices are the headline. The slow erosion of demand that follows is the part that actually decides how rough the landing gets. Picture a negative supply shock the way most coverage frames it. Costs jump, growth gets pinched, and the economy ends up in that uncomfortable spot where prices climb while activity drags. That framing is not wrong. It is just incomplete, and the missing half happens to be the half that matters more for where growth goes next. Having spent years studying economies at very different stages of development and having sat on the Federal Open Market Committee as these questions played out in real time, the pattern I keep coming back to is this: A supply shock is not one shock. It is a first shock that can summon a second one. The initial blow lands on supply and shows up as inflation. Then, with a lag, it can reappear on the other side of the economy as a negative demand shock. And that delayed second act is usually where a real slowdown takes root. The ear...