The White House Council of Economic Advisers has warned that artificial intelligence could widen global inequality, deepen labor market polarization, and reshape industrial competitiveness unless governments adopt targeted strategies to manage the transition. The analysis, titled “Artificial Intelligence and the Great Divergence,” was published January 21, 2026, marking the first anniversary of the second Trump administration.

The report argues that AI’s economic benefits—ranging from higher productivity to growth in high-value sectors—are likely to accrue unevenly. Advanced economies and multinational firms already dominate semiconductor manufacturing, cloud infrastructure, and frontier model development, while emerging and low-income economies face barriers such as talent scarcity, weak digital infrastructure, and limited compute access. Without intervention, the authors warn, the technology risks reinforcing a “winner-take-most” global system.

Labor market effects are identified as a second axis of divergence. High-skill workers in technical and managerial fields are expected to gain from productivity enhancements and new job categories, while middle-skill routine occupations face displacement pressures. Countries lacking retraining capacity or labor protections could see wage inequality widen and mobility decline, the report finds.

Policy design is presented as the primary determinant of whether AI drives convergence or divergence. International coordination on research, compute access, standards, and talent mobility is highlighted as a mechanism for reducing global concentration, while domestic industrial strategies, workforce retraining, and targeted public investment are viewed as essential for distributing gains across populations and sectors.

The White House report does not dismiss AI’s economic potential, but cautions that the next decade could define a new economic archetype in which a handful of countries and firms shape technological direction and capture most value. With AI accelerating faster than institutional adaptation, the Council concludes that governments face a narrowing window to align innovation with broad-based economic inclusion.

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