BlackRock's Rieder: AI-Driven Productivity Revolution Could Sustain U.S. Nominal GDP Growth at 6%
Claire Weston
BlackRock's global fixed-income CIO Rick Rieder says last month's payroll decline signals an AI-driven productivity revolution, not economic weakness — and holds his 6% nominal GDP growth forecast as firms produce more with fewer workers.
Payrolls fell — why does he say that's not bad news?
Nonfarm payrolls dropped 23,000 last month; May and June were revised down a combined 103,000. The unemployment rate fell to 4.1%.
Rieder's read: the data were "impressively unimpressive" — but not a sign of contraction.
This means → firms are using AI and operational efficiencies to expand output without adding headcount; reduced immigration is also shrinking labor supply. The payroll number looks weak, but output hasn't fallen.
In plain terms = companies aren't struggling to hire — they're finding they don't need to hire as many people.
"6% nominal GDP growth" — what does that number actually mean?
Rieder holds his forecast of 6% U.S. nominal GDP growth, measured in current dollars before stripping out inflation.
Bureau of Economic Analysis data: through July the annualized rate was 7.87%; real GDP growth over the same period was just 1.5%.
This means → a large chunk of nominal growth is price increases (inflation), but Rieder argues that even after adjusting, the output side remains healthy.
Labor productivity has declined in only one of the past 16 quarters. This reflects a sustained improvement, not a one-off blip.
If rate hikes can't fix inflation, what can?
Rieder restated his view: raising the overnight fed-funds rate has limited effect on sticky prices in healthcare, insurance, and education.
"I don't think moving the overnight rate really solves the problem," he said.
He favors fiscal tools instead: deregulation, housing-permit reform, student-debt relief. This means → in his view, unblocking supply-side bottlenecks does more to ease inflation at its source than tightening monetary policy.
On rate cuts: still possible this year if the Fed's preferred inflation gauge falls to the "high-2% range" — but a single soft payroll print is not enough to shift policy.
How is he positioning bonds? "As boring as possible."
With yields higher, Rieder's fund has reached a "high-6% range" yield target without sacrificing credit quality or liquidity.
Preferred holdings: European fixed income, emerging markets, and securitized assets (including commercial real estate and asset-backed securities) — not investment-grade corporate credit.
In plain terms = he treats equities as the primary risk vehicle and deliberately keeps the bond book dull — "as boring as possible."
Investment-grade corporate bonds are "completely unattractive," he said, citing persistent supply pressure — including Alphabet's $25 billion bond deal completed this week.
What is the biggest risk to this framework?
The core assumption behind Rieder's entire thesis: AI can sustain productivity gains over time.
If AI's productivity boost turns out to be a one-off rather than a continuing trend, the 6% nominal GDP forecast loses its foundation.
This means → the debate isn't about one month's data — it's a bet on whether AI can genuinely reshape how the economy operates.
Content is for reference only, not financial advice.