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The last time the global economy divided this sharply, it took generations to notice. The Industrial Revolution didn’t announce itself with a single invention or policy—it accumulated, quietly at first, until the gap between industrializing nations and everyone else became impossible to ignore. A White House Council of Economic Advisers report released this month suggests we may be witnessing a similar split. The difference, according to the January 2026 analysis, is speed: what once took decades now unfolds in months.
The 26-page report, titled “Artificial Intelligence and the Great Divergence,” presents the administration’s case for American AI dominance through deregulation, infrastructure investment, and technology exports. It is, by design, an advocacy document—the Council explicitly frames its analysis around “the actions President Trump is taking to ensure that America continues to lead on AI.” But beneath the policy arguments lies a data story worth examining on its own terms.
The concentration of AI capabilities has reached striking levels. The United States now controls roughly three-quarters of global GPU cluster performance for AI training. Cumulative private AI investment in the U.S. exceeded $470 billion between 2013 and 2024—nearly ten times Europe’s roughly $50 billion over the same period. China, in second place, saw $9 billion in private AI investment in 2024 alone. In the first half of 2025 alone, AI-related investment added 1.3 percentage points to U.S. GDP growth, a contribution the report compares to railroad investment during the Industrial Revolution. Investment in information processing equipment and software grew at 28 percent annually in the first half of 2025, up from 5.5 percent in 2024.
The pace of change compounds these advantages. Computing power for AI training has grown roughly fourfold annually since 2010—a billionfold increase since 2012. AI performance on coding benchmarks jumped from 4 percent to 72 percent in a single year. The cost of running AI models has fallen by 9x to 900x in recent years, depending on the application. These are not incremental improvements.
Adoption is spreading accordingly. The report indicates that 78 percent of organizations now use AI in some capacity, up from 55 percent in 2023. Forty percent of U.S. workers report using generative AI on the job. Yet a gap persists between experimentation and production: only about 10 percent of firms have integrated AI into actual goods and services. For legal technology and information governance professionals, this distinction matters. The question isn’t whether your organization uses AI—it’s whether that use has moved beyond pilot projects into core workflows.
On employment, the report offers measured uncertainty rather than confident prediction. Evidence cuts in multiple directions: some studies show that early-career workers in coding and customer service are facing displacement, while others find that AI exposure actually increases employment in sectors that can leverage AI capabilities. The Council invokes Jevons’ Paradox—the historical pattern in which efficiency gains expand rather than contract overall resource use—but acknowledges that specific conditions must hold: productivity gains must lower prices, and lower prices must stimulate enough new demand to offset labor savings. Whether legal services will follow the path of radiologists (whose employment has risen despite AI predictions) or telephone operators (whose roles largely disappeared) remains genuinely uncertain.
The report is notably candid about current AI limitations. Today’s systems, it acknowledges, “often struggle with stringing together longer sequences of actions” and “are currently unable to carry out substantive projects by themselves.” For eDiscovery and legal research—tasks requiring sustained reasoning across thousands of documents—this constraint is directly relevant. AI can accelerate components of these workflows, but the report’s own assessment suggests full automation of complex legal tasks remains beyond current capabilities.
The policy prescriptions—deregulation, accelerated permitting, energy infrastructure expansion—reflect administration priorities that will shape the operating environment for legal technology in the coming years. The report projects that deregulation alone could add 0.3 to 0.8 percentage points to annual GDP growth over two decades. Whether these benefits materialize and how they are distributed across industries and workers will depend on implementation details that the report does not address. What’s clear is that regulatory approaches are diverging internationally, creating compliance complexity for organizations operating across jurisdictions.
The Industrial Revolution’s winners and losers weren’t obvious in 1780. They became obvious by 1880. The Council’s report argues that the AI revolution is compressing that timeline dramatically—that the divergence is measurable now, in real time, through investment flows, capability benchmarks, and adoption rates. For legal technology professionals, the relevant question isn’t whether this analysis is correct in every particular. It’s whether your organization’s current trajectory positions you to benefit from AI’s productivity gains or to be disrupted by competitors who moved faster.
The report’s metrics offer a starting point for that assessment: Is your AI use among the 78 percent experimenting or the 10 percent producing? Is your technology investment growing at anything approaching 28 percent annually? Do you have governance frameworks prepared for diverging regulatory regimes? The answers won’t determine whether a second Great Divergence is coming. But they may determine which side of it you’re on.
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Source: HaystackID shared with permission from ComplexDiscovery OÜ