One Big Beautiful Bill, Wine Tariffs, Wearable Technology, Monetary Policy & AI

27:46Up next, from our wrists to our fingers, everyone seems to be wearing some device to monitor how healthy our habits are. We visit the wonderful world of Whoop to see what's really possible.

28:05So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in.

28:424imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again. Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time.

29:17Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. 4certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers.

29:58Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

30:33This is a story about the fountain of youth. Since long before Ponce de Leon supposedly got lost looking for it in the swamps of Florida in 1513, humans have been on a quest for a longer and healthier life, leading to everything from exercise regimens to diet crazes to weight loss drugs. Now, as in everything else, big tech is in the game. But are elaborate wellness devices really worth it? Or does the path to longevity boil down to just a few fundamental principles? Wearable technology and the sensors that we have today will continue to unlock new capabilities. Eventually, we will arrive to a point where we can really monitor our processes and intervene early on before a disease could develop.

31:23When you wear something on your body, it starts to say a lot about who you are. We think that wearables are a key to the Maha agenda of making America healthy again. And we are going to, my vision is that every American is wearing a wearable within four years. Health and Human Services Secretary Robert F. Kennedy Jr.'s goal might seem ambitious, But the market for global wellness wearables is on the rise. Data firm IDC expects global revenues to grow from$63 billion last year to nearly$78 billion by 2029. With wearable technology, you need to build something that's either cool or invisible, we like to say.

32:09Will Ahmed is the founder and CEO of Whoop, one of the major players in the wellness wearable field. As of its last funding round in 2021, it was valued at$3.6 billion. Will first came up with the idea during his time as captain of Harvard's squash team. Whoop builds wearable technology that's really designed to improve performance and health. The company was founded out of the Harvard Innovation Lab 12 years ago. We started with the world's best athletes, where we were really designing high-performance technology technology to replace what at the time was a lot of medical technology. An electrocardiogram, a PSG machine, the gold standard for sleep, a chest strap which measures heart rate during exercise.

32:54This is the original prototype that we built in 2012. Now it looks ridiculous in a million ways, but it could measure this thing called heart rate variability from the wrist, which was a breakthrough. We wanted to take these sophisticated but antiquated pieces of technology and put them in a much smaller form factor. The business has really evolved quite beautifully from being a very high-performance athletic product to now being a tool that many people are using to live longer. While wellness wearables today are heavily focused on new technology that can measure heart health, it was more than 100 years ago when the idea for the pedometer was first patented.

33:38Polar raised the stakes in the 80s with the first wireless heart rate monitor, but it was Fitbit in the early 2000s that took the industry mainstream. Today, the wellness wearables arena is crowded, attracting billions in investment and spawning new startups regularly. Wearables today are nearly ubiquitous. I think certainly when I go out and about, I do see people with an Apple Watch, a Whoop, an Aura. We do see people wearing, with various devices, out in the world today. Alex Morgan is a partner in Kostla Ventures, where he focuses on investment in emerging biotech, healthcare, and data science.

34:15For many wearables, the competitive landscape is a challenge. We certainly saw in some of the first generation of activity-based wearables that were many companies that were all measuring activity and heart rate. And it was very hard to compete with a product that really didn't provide unique information. And it was much more about brand and packaging and perhaps influencer. And there are ways that you can win in a competitive landscape with better branding, better marketing, better access to influencers. We tend to look for technology that is unique, often protectable with IP, that offers unique benefit.

34:53And that is something that we particularly look for. Samsung recently released the Galaxy Watch 8, offering new health tracking capabilities. In late 2024, Apple announced its latest smartwatch with advanced features like a sleep apnea detector. But not every company is successful. Amazon discontinued its Halo fitness ban in 2023, underscoring the challenge of entering this market without a clear edge. With multiple devices to choose from, how does one brand set itself apart from the pack? Wearables have become popular in various ways. How do you compare? What's your market niche? So we've designed the product to be worn very easily in whatever location you want.

35:39And what does that ultimately achieve? Well, it achieves a solution where you can be collecting this health data 24-7. And continuous data is ultimately what makes our tool so successful. You know, a real challenge, I think, with other products that came before Whoop is they would give you these sort of snapshots along the way. We collect an enormous amount of data on the human body, physiological data. It's really accurate. We've tuned the sensors to be really accurate. But what that also means is we're not going to do a thousand other things, right? We're not a smartwatch. We're not doing phone calls.

36:18You know, you're not going to call an Uber with your Whoop. But at the end of the day, we don't spend that much time thinking about competition. We're just incredibly focused on how do we drive health outcomes. So how does a wearable company help drive health outcomes? For Whoop, it's about differentiating itself through technology, using sophisticated biometric monitoring and data collection for more actionable health insights. Its most recent models are the Whoop 5.0 and Whoop MG. It's got a 14-day battery life. It's got more accurate sensing. The Whoop-MG has medical clearances, so it's able to do ECG monitoring, AFib detection, blood pressure insights.

37:00So these are all really powerful innovations that, you know, frankly just didn't exist. Whatever wearable technology is doing to measure or interact with an individual, the accelerating ability of AI and machine learning to improve the capability of that measurement or that intervention is only accelerating. We are translating into a phase where there are wearable technologies that aren't just providing insights, but actually providing interventions. They're actually therapeutic in some way. And I think that is going to accelerate the current adoption even more. Because I do think that most people, most customers, don't necessarily want insights.

37:38Most people want solutions to problems that they have, whether it's problems sleeping, problems with depression, concerns about weight. Wellness wearables have certainly become popular, but are they a good business? And what takes a wearable from being a nice-to-have to being a half-to-have? When we evaluate a company, there's no single way we evaluate it. So sometimes we invest in unique technology, and that's actually the majority of my time, trying to identify unique technology that is crossing over into being productizable and translatable into products that we believe will provide real value to customers and patients.

38:19And that's, I think, one of the first things we want to do. Is this product or technology really able to help people in a potentially powerful way? Another technology that I'm really excited about that's being used is a company called Flow Neuroscience. So this is on the market in the UK and Europe. Over 10 ,000 people a month use it. And it also uses a gentle electric stimulation to treat mild to moderate depression and general anxiety disorder. Numerous clinical trials have shown benefit. So in some of the more recent clinical trials, about 16 % improvement in remission in depressive symptoms compared to 20 % in placebo.

38:58So the ideal startup for us is a technology that provides unique, powerful patient and customer benefit in some way. They're able to say, here's an innovation in technology that is crossing over from basic science and research and moving into an opportunity to go out and help many people that have a particular problem. And able to do that in a unique and special way. Certainly, there are people using things like continuous glucose monitoring that you may not know that they're using. But if you ask someone with diabetes, that is probably how they may be managing it today if you're insulin-dependent diabetic.

39:34So I would say that it has crossed the chasm into being something that's speculative, into being a product that's just part of the everyday lives for many Americans. We're now in 50 markets. I think one of the biggest changes for Whoop in the last two years is going from being almost entirely a US business to being a global business. That obviously introduces new challenges, but also enormous growth. And so we've seen the business growing considerably in the last 12 months, 70 % year-over-year growth, which is really exciting. We don't have the data yet to show that wearables like Whoop will actually make us healthier, much less live longer.

40:11And some believe the path to the fountain of youth ultimately means doing the things our mothers have taught us through the generations. The secret of healthy life is very simple, and it doesn't require an industry to maintain it. Ignore all that noise and focus on these five fundamental components from diet to exercise, stress, sleep, and so on. Albert Laszlo Barabasi is a network science physicist. He believes wearables may help users stay healthy, but there's no secret about the keys to success. As long as you focus on these basics and you make sure that these are guaranteed, you are actually setting yourself up for a healthy lifestyle.

40:54Everything else is more or less an intervention that is trying to correct the problem because these have not been properly observed. Certainly, having access to all the data points about us does give us a sense of control. And I think that sense of control fails when we realize that we don't know how to correct that. And we're all going to encounter that moment in our lives where the numbers are flashing and showing that something is out of balance. Where do wearables need to go from here if they're to become proactive health companions? Not surprisingly, artificial intelligence may be part of the answer.

41:34We've used artificial intelligence for a decade to really improve our algorithms for sensing. And the result, I think, is being able to demonstrate in the market we're the most performance product. We still have the world's best athletes that wear Whoop. We have medically approved features. And we have consumers that swear by our accuracy. You don't really get those combination of things if the underlying data isn't really good. Eventually we will arrive to a point where we can really monitor our processes and intervene early on before a disease could develop. One way to think about it is that every single disease that I will have throughout my lifetime is already within me developing because I'm already born with all the mutations and all the defects that will eventually just develop themselves and manifest themselves with age.

42:23And the question is, how can we capture that early and how can correct that before it's too late? And in that respect, wearable technologies, as well as the many monitoring devices that the technology is making possible, eventually will be the answer. Are they the answer right now? Not necessarily. We are translating into a face where there are wearable technologies that aren't just providing insights, but actually providing interventions. They're actually therapeutic in some way. If we look at the next few years, right, health monitoring will start by enabling individuals and being kind of a continuation of that doctor's office.

43:02And I think in the long run, it'll ultimately replace the doctor's office. At the point where wearables can replace our visits to the doctor, or even make those visits a bit less frequent, they will truly move from the nice to the necessary for us all. and that could lead to a sort of technological fountain of youth found not in the swamps of Florida, but right on your wrist. Coming up, some of us may be worried about artificial intelligence coming for our jobs, but does that include all those economists at the Federal Reserve? That's next on Wall Street Week. So there's a lot of noise about AI, but time's too tight for more promises.

43:45So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter business. IBM. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do.

44:21Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again. Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last.

45:01Explore the possibilities at 4imprint.com. 4imprint. 4certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

45:44Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

46:11This is a story about an invisible hand guiding the economy. No, not the invisible hand of self-interest that Adam Smith wrote about in The Wealth of Nations. This invisible hand is much more modern. It's that artificial intelligence we keep hearing so much about. Our special contributor Larry Summers is a macroeconomist who also sits on the board of OpenAI. Who better to ask what AI could mean for Adam Smith's economy?

46:38Lawrence H. Summers:My guess is that this is going to raise the neutral rate of interest over time, both because of the massive investment that's going to need to take place in data centers and because of the acceleration in the rate of growth. So I think the so-called R star is likely to be higher, perhaps even considerably higher because of AI. I think it's possible that it's going to be a disinflationary force because of acceleration of productivity growth as the Internet was during the 1990s. The economic potential of AI varies widely, with some saying that it can disrupt jobs, whole industries, and even pose existential challenges.

47:32It's not yet like replacing jobs in the way, to the degree that people thought it was going to. Of course, jobs will change, and of course, some jobs will totally go away. It really is an existential threat. Some people say this is just science fiction. And until fairly recently, I believed it was a long way off. Now I think it's quite likely that sometime in the next 20 years, these things will get smarter than us. And we really need to worry about what happens then. So let me ask about one particular, perhaps rule of thumb or rule, and that is the relationship between inflation on the one hand and unemployment on the other, which has been an important issue for the Federal Reserve, for example, with its dual mandate to address both of those.

48:08Do you think it could change that relationship?

48:11Lawrence H. Summers:It certainly could, and you can make arguments in both directions. Perhaps the more flexible economy means that rates of inflation or prices will be more sensitive to demand and unemployment than they were before. Perhaps the more rapid underlying productivity growth will mean that there's less sensitivity because when there's an increase in demand, the economy will be able to accommodate it more easily because there's more capacity fundamentally in the economy. I think it's difficult to know. And if I had to guess, the effects that I described on the neutral interest rate and so forth are probably going to be more salient than any change in the slope of the Phillips curve of that relationship you referred to between inflation and unemployment.

49:19Lawrence H. Summers:but nobody can be confident in their judgments about this kind of thing. There's the uncertainty about what AI could mean for the economy, but there are also questions about what it could mean for central banks trying to set monetary policy and how it could change the way they gather and analyze data about the economy. Sasha Steffen of the Frankfurt School of Finance has studied the ways AI might change monetary policy transmission. Specifically, and this is also the most common or most natural thing people are thinking about here, is it will improve forecasting. And I think this is sort of where everybody's interested.

49:57How are interest rates going? How does the economy develop going forward? How is inflation going forward? So here we're going to see a lot already happening in terms of AI. And I think here there's also a lot to learn going forward. Is it likely to make forecasting more accurate, do you think? I think definitely. So I think one dimension of AI is basically increasing the toolbox and the methodologies, improving on the methodologies, thereby also making forecasting much more precise. Also, basically using models to use existing data and use them in completely novel ways. How can we use bond market data?

50:34How can we use loan market data? So we can employ these models to look at things that we haven't been able to do before. We can look at websites. We can use images from satellites. We can use social media, right? So actually, I have a study, a recent one, in which we try to use AI and Twitter or X in order to generate an index about what do individuals like households have an idea about how inflation is going to develop going forward, right? So this is what we call inflation expectations. and this is something where central banks, the Federal Reserve, but also the European central banks are looking much more closely at compared to what we call like realized inflation, what we have.

51:19So what do actually people, households expect in terms of inflation going forward because this is going to affect how they are going to behave, what kinds of products are they going to buy, what kinds of sort of how they are going to save going forward and also firms are going to be affected by that Because they see if customers don't buy, the shelves are going to remain full, and they basically report a completely different bottom or top line going forward. What are the risks of expanding out the data that way? I mean, large language models, by and large, are based on what human beings have generated.

51:52And human beings are not perfect, and you can get hallucinations that way. What are the risks, particularly as you go to things like social media, for example, X? Information sensitivity is always run, right? which means that if new information arises, that can cause maybe a complete meltdown of the market. Stocks are going to be sold. And of course, AI makes it even more likely that these risks actually, or these new information is actually going to emerge. But also another risk is, for example, interconnectedness. And AI also will connect institutions more going forward. There might be shared data.

52:26There might be shared platforms that might increase interconnectedness. So if one domino drops, the others might actually drop as well. So amplification of existing risks is definitely one problem. Another problem that's very frequently mentioned if you talk to practitioners in this field is also a kind of what we call model bias, right? So what happens if we use data that has been generated by a model that has already been false to begin with, and then we continue to use that data going forward? There will be so-called like perpetuation of these biases going forward and like garbage in, garbage out.

53:01We hear from some experts in AI that we're getting to a point, maybe past a point, where we don't actually know how it works. It's a black box in that sense. If that's true, how can a central bank rely on it? How can it verify it or certify it to make sure that it's making correct inferences? That's an absolute important point. This is on the one hand, this is definitely a risk, right? Because if things go wrong, the question, the trust that might be there quickly goes away and then the things might even be worse going forward. One of the potential powerful applications of AI for central banks is to not replace necessarily, but to complement the professional forecasting that the central banks usually rely on.

53:45They usually do, on a quarterly basis, ask a lot of professionals and investment banks and other institutions as to what do they expect the economy to develop going forward, specifically when it comes to inflation. And now it might be actually possible to set up an AI model that exactly does that. So basically it is trained on the individual. It's trained on the CVs of the professional forecasters, how they have actually voted or what they have done in previous forecasts that they did. What is their job? What they learned? And then asked the model instead of the forecaster. And the existing research already tells us that there's a high degree of overlap in terms of what the professional forecast actually would tell him or herself and what the model actually sells.

54:36But then the one risk, and now coming back to your question, is that how can we actually make sure that the model actually uses only the information that is available at the time of the forecast itself? Or is it trained basically on information that it should not know because it actually happened afterwards? Well, I wonder about the systemic risk, because not being a computer science, it's possible that AI could spot relationships that otherwise humans might miss. I mean, so you have something like Silicon Valley Bank in the United States. Is it possible AI would have spotted imbalances earlier that humans missed?

55:13Specifically with Silicon Valley Bank, it would have recognized this because it's also interesting that people did not realize this because it was obvious, to be clear, because actually all the publicly available data was pointing exactly at that. But no, you're absolutely right. So these kind of systemically important banks, also other banks, risks emerging. emerging based on, for example, liquidity consideration might be detected much, much earlier compared to what a regulator or supervisor might actually see. And will we need human beings, economists presumably, to check what's going on to make corrections?

55:47Because you can have hallucinations in any model, and if you don't correct them, as I understand it, they just compound. I think this is exactly one danger that people might actually try to rely on AI and these models too much and think, okay, these models actually know what's going to happen. But the idea how to assess these outcomes or these outputs, that is a crucial one. And this means, I think also for us, not only as economists, but also as educators, we need to make sure that people understand the underlying theory and economics actually in order to evaluate, is that what the model actually tells me?

56:25Is it something that's actually plausible or something that's not, right? So I think that puts a lot of pressure on us as educators, but then also on the different institutions. Do they actually train the people right going forward? That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism. Thank you.

57:43We'll see you next time. Plus, you get free samples, expert help, and their 360-degree guarantee. So you can be 4imprint certain everything shows up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level.

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