• Trump signed executive order blocking state AI regulations on December 11
• President dismissed concerns of emerging AI bubble with "No, I love AI"
• Economists warn of potential job losses and financial instability reminiscent of dot-com crash

WASHINGTON, DC (TDR) — The Trump administration is charging ahead with an aggressive push to deregulate artificial intelligence, brushing aside mounting concerns from economists and Federal Reserve officials about potential job losses and a financial bubble reminiscent of the dot-com crash.

On December 11, President Trump signed an executive order blocking states from enforcing their own AI regulations, marking a decisive victory for Silicon Valley executives who have lobbied for months against a patchwork of state-level oversight. When asked in early November about concerns of an emerging bubble that could damage the economy, Trump dismissed the worries outright.

"No, I love AI," he said, according to The New York Times.

Administration Celebrates Economic Growth

The administration's optimism was on full display this week as the Commerce Department announced the U.S. economy expanded at a 4.3% annual rate in the third quarter, the strongest growth in two years. Kevin Hassett, director of the White House National Economic Council, told CNBC the data suggested signs of a "boom" in AI, comparing the current moment to the 1990s computer revolution.

"It's really a fantastic number and it's a great Christmas present for the American people," Hassett said of the GDP growth figure. "Trump's trade agenda is working. AI boom is being seen in the data."

Over the past year, Trump and top aides have leaned fully into the technology, offering funding and regulatory support for AI's biggest corporate backers. The administration is betting that AI can drive one of the few major growth engines in an otherwise uncertain U.S. economy.

Growing Concerns From Economists

Economists and even some Silicon Valley technologists remain more wary. Critics warn AI could bring significant job losses, at least temporarily, and worry the industry's rapid expansion could prove financially unsustainable.

Federal Reserve Chair Jerome Powell recently drew a stark picture of a labor market that looks fine on the surface but is quietly losing momentum underneath. Once adjusted for statistical overcounting, "job creation is pretty close to zero," Powell said during an October press conference.

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"You see a significant number of companies either announcing that they are not going to be doing much hiring, or actually doing layoffs, and much of the time they're talking about AI and what it can do."

According to a Challenger, Gray & Christmas report, U.S. employers have announced nearly 946,000 layoffs so far this year with more than 17,000 explicitly tied to AI and another 20,000 to automation.

Federal Reserve Research Highlights Risks

Research from the New York Federal Reserve Bank suggests some firms are retraining employees rather than firing them, but hiring is slowing. About 12% of service firms using AI said they had hired fewer workers due to its use in the past six months.

A May National Bureau of Economic Research paper warned that in an "unbounded growth" scenario where AI is fully developed, up to 23% of workers may lose employment.

Glenn Hubbard, former chair of the Council of Economic Advisers under President George W. Bush, told the Times that while "generative AI is a potential game changer for productivity and the economy," the shift to AI could strain workers and communities.

"AI is happening rapidly, and we didn't help people cope with globalization and technological change very well over a 30- and 40-year period. We're probably not going to do it again."

Deregulation Push Faces Legal Challenges

Trump's executive order directs the Justice Department to set up an "AI Litigation Task Force" to sue states over their AI-related laws. It also directs Commerce Secretary Howard Lutnick to study whether the department can withhold federal rural broadband funding from states with unfavorable AI laws.

The order drew criticism across the political spectrum. Sen. Ed Markey (D-MA) called it "an early Christmas present for his CEO billionaire buddies," while tech policy researchers say the Trump administration cannot restrict state regulation in this way without Congress passing a law.

Can America balance AI innovation with worker protections, or are we sleepwalking into another economic bubble?

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