“When you see 3.8% growth in consumption, that's clearly coming from stock gains. And if those stock gains go in reverse, we're going to see a big hit to consumption. So I don't think that's at all analogous.”
The Tech Report · October 2026
Context
Asked what China's AI stock crash says about the fallout if a US AI bubble pops, Baker says the cases differ: US consumer spending grew strongly while wages barely moved, so it's propped up by stock gains.
Transcript
…to do that. So in that sense, China could have a huge collapse. I didn't know about it until I saw this Reuters piece. I followed things reasonably closely. So I think there really is this segregation that things could go on in China and it has very little impact in much of the rest of the world.
…was the 2008 crash or the dot-com bubble or anything like that in terms of scale. And I suppose looking at what has happened in China and the smaller tech industry that it does have, what does that tell you about how big the ripple effect might be for the AI bubble in America if/slash when it pops?
…say. But the other part of the story is on the consumption side, that very clearly, we just got data for third quarter GDP. Consumption grew, I think was a 3.8% annual rate. Wages are barely growing. So with very little job growth, real wages are actually falling. So in real terms, total wages are almost flat. I mean, I think they were somewhat positive in the quarter, really trivially. So when you see 3.8% growth in consumption, that's clearly coming from stock gains. And if those stock gains go in reverse, we're going to see a big hit to consumption. So I don't think that's at all analogous. I'm sure there's been some hit to consumption in China, but nothing of the same order of magnitude. The other story with China, if we're talking about their consumption, they're still recovering from a collapse of their housing bubble. So they had a massive bubble in housing that began to deflate. I'd have to go back and check. It was several years ago, and they've not recovered from that. And…
I mean, one of the key differences that I have found when looking into this is that China, you mentioned data centers earlier, China basically has built a vast computer corridor with dedicated energy access and infrastructure and did so very quickly. It's obviously still building it as, or maybe…
Yeah, I think the underlying issue is there isn't the demand for that sort of, you know.
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