Is there an AI bubble? Financial institutions sound a warning

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By KELVIN CHAN and MATT O’BRIEN, AP Technology Writers

LONDON (AP) — Lingering doubts about the economic promise of artificial intelligence technology are starting to get the attention of financial institutions that raised warning flags this week about an AI investment bubble.

Officials at the Bank of England on Wednesday flagged the growing risk that tech stock prices pumped up by the AI boom could burst.

“The risk of a sharp market correction has increased,” the U.K. central bank said.

The head of the International Monetary Fund raised a similar alarm hours after the Bank of England’s report.

Global stock prices have been surging, fired up by “optimism about the productivity-enhancing potential of AI,” IMF Managing Director Kristalina Georgieva said.

But financial conditions could “turn abruptly,” she warned in a speech ahead of the organization’s annual meeting next week in Washington.

Is there an AI bubble?

“Bubbles obviously are never very easy to identify, but we can see there are a few potential symptoms of a bubble in the current situation,” said Adam Slater, lead economist at Oxford Economics.

Those symptoms include rapid growth in tech stock prices, the fact that tech stocks now comprise about 40% of the S&P 500, market valuations that appear “stretched” beyond their worth and “a general sense of extreme optimism in terms of the underlying technology, despite the enormous uncertainties around what this technology might ultimately yield,” Slater said.

The most optimistic projections about the fruits of generative AI products foresee a transformation of the economy, leading to annual productivity gains that Slater says have not been seen since the reconstruction of Europe after World War II. At the lower end, economist Daron Acemoglu of the Massachusetts Institute of Technology has predicted a “nontrivial but modest” U.S. productivity gain of just 0.7% over a decade.

“You’ve got this incredibly wide range of possibilities,” Slater said. “Nobody really knows where it’s going to land.”

Doubts about the worth of top AI companies

Investors have closely watched a series of intertwined deals over recent months between top AI developers such as OpenAI, maker of ChatGPT, and the companies building the costly computer chips and data centers needed to power these AI products.

OpenAI doesn’t turn a profit but the privately held San Francisco firm is now the world’s most valuable startup, with a market valuation of $500 billion. It recently signed major deals with chipmaker Nvidia, the world’s most valuable publicly traded company, and its rival AMD.

The Bank of England didn’t name any specific companies but said that on “a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence.”

The report said stock market valuations are “comparable to the peak” of the 2000 dotcom bubble, which then deflated and led to a recession. With tech stocks accounting for an increasingly large share of benchmark stock indexes, stock markets are “particularly exposed should expectations around the impact of AI become less optimistic.”

The bank outlined so-called downside risks, including shortages of electricity, data or chips that could slow AI progress, or technological changes that could lessen the need for the type of AI infrastructure currently being built around the world.

The IMF’s Georgieva said current stock valuations “are heading toward levels we saw during the bullishness about the internet 25 years ago. If a sharp correction were to occur, tighter financial conditions could drag down world growth,” she said.

What the tech bosses say

Tech company bosses are downplaying the doomsayers.

The current AI boom is an industrial, rather than financial or banking, bubble and will be beneficial for society even if it bursts, Amazon founder Jeff Bezos said.

“The ones that are industrial are not nearly as bad. It could even be good because when the dust settles and you see who are the winners, society benefits from those inventions,” Bezos said at a recent tech conference in Italy.

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He compared it to a previous biotech bubble in the 1990s that resulted in new life-saving drugs.

The excitement around AI is drawing in a huge wave of money to fund new business ideas, but it’s also clouding investors’ judgment, Bezos said.

“Every company gets funded, the good ideas and the bad ideas. And investors have a hard time in the middle of this excitement distinguishing between the good and bad ideas and so that’s also probably happening today,” he said.

On a tour last month of a Texas data center, OpenAI CEO Sam Altman predicted people will “make some dumb capital allocations” and there will be short-term ups and downs of overinvestment and underinvestment.

But he added that “over the arc that we have to plan over, we are confident that this technology will drive a new wave of unprecedented economic growth,” along with scientific breakthroughs, improvements to quality of life and “new ways to express creativity.”

Awaiting the promise of more useful AI agents

Nvidia CEO Jensen Huang acknowledged in a CNBC interview on Wednesday that OpenAI doesn’t yet have the money to buy its chips, but “they’re going to have to raise that money” through revenue, which “is growing exponentially,” along with equity or debt.

Huang said he also believes a transition has happened as leading AI developers are moving from chatbots that operated “basically at a loss” because the models “weren’t useful enough” to one in which the AI systems are capable of higher-level reasoning.

“It’s doing research before it answers a question,” he said. “It goes on the web and studies other PDFs and websites, it can now use tools, generate information for you, and it creates responses that are really useful.”

AI companies have spent more than a year pitching the transformative potential of “AI agents” that can go beyond a chatbot’s capability by being able to access a person’s computer and do coding and other work tasks on their behalf. But as the initial hype fades, Forrester analyst Sudha Maheshwari said businesses looking to buy these AI tools are taking a closer look at whether they’re getting enough return on their investments.

“Every bubble inevitably bursts, and in 2026, AI will lose its sheen, trading its tiara for a hard hat,” she wrote in a report Wednesday.

O’Brien reported from Providence, Rhode Island and Abilene, Texas.

Fed minutes: Most officials supported further rate cuts as worries about jobs rose

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By CHRISTOPHER RUGABER, AP Economics Writer

WASHINGTON (AP) — Most members of the Federal Reserve’s interest-rate setting committee supported further reductions to its key interest rate this year, according to minutes from last month’s meeting released Wednesday.

A majority of Fed officials felt that the risk unemployment would rise had worsened since their previous meeting in July, while the risk of rising inflation “had either diminished or not increased,” the minutes said. As a result, the central bank decided at its Sept. 16-17 meeting to reduce its key rate by a quarter-point to about 4.1%, its first cut this year.

Rate cuts by the Fed can gradually lower borrowing costs for things like mortgages, auto loans, and business loans, encouraging more spending and hiring.

Still, the minutes underscored the deep division on the 19-person committee between those who feel that the Fed’s short-term rate is too high and weighing on the economy, and those who point to persistent inflation that remains above the central bank’s 2% target as evidence that the Fed needs to be cautious about reducing rates.

How members of the Federal Open Market Committee voted Wednesday on cutting a key interest rate. (AP Digital Embed)

Only one official formally dissented from the quarter-point cut: Stephen Miran, who was appointed by President Donald Trump and was approved by the Senate just hours before the meeting began. He supported a larger, half-point cut instead.

But the minutes noted that “a few” policymakers said they could have supported keeping rates unchanged, or said that “there was merit” in such a step.

The differences help explain Chair Jerome Powell’s statements during the news conference that followed the meeting: “There are no risk-free paths now. It’s not incredibly obvious what to do.”

Miran said in remarks Tuesday that he thinks inflation will steadily decline back toward the Fed’s 2% target, despite Trump’s tariffs, and as a result he doesn’t think the Fed’s rate needs to be nearly as high as it is. Rental costs are steadily declining and will bring down inflation, he said, while tariff revenue will reduce the government’s budget deficit and reduce longer-term interest rates, which gives the Fed more room to cut.

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Yet many other Fed officials remain concerned about stubbornly high inflation, the minutes showed. Jeffrey Schmid, president of the Federal Reserve’s Kansas City branch, said in a speech Monday that “inflation is too high” and argued that the Fed should keep rates high enough to cool demand and prevent inflation from worsening.

And Austan Goolsbee, president of the Fed’s Chicago branch, said in an interview Friday with The Associated Press that he supported a cautious approach toward more cuts, and wanted to see evidence that inflation would cool further.

“I am a little uneasy with front loading rate cuts, presuming that those upticks in inflation will just go away,” he said.

The minutes provide insight into how the Fed’s policymakers were thinking last month about inflation, interest rates, and hiring. Since then, however, the federal government shutdown has cut off the flow of economic data that the Fed relies on to inform its decisions. The September jobs report wasn’t issued as scheduled last Friday, and if the shutdown continues, it could also delay the release of the inflation report set for next Wednesday.

IRS to furlough nearly half of its workforce as shutdown enters second week

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By FATIMA HUSSEIN, Associated Press

WASHINGTON (AP) — The IRS will furlough nearly half of its workforce as part of the ongoing government shutdown, according to the an updated contingency plan posted Wednesday to the agency website. Most IRS operations are closed, the agency said in a separate letter to IRS workers.

The news comes after President Donald Trump and Congress failed to strike an agreement to fund federal operations and the government shutdown has entered its second week, with no discernible endgame in sight.

The agency’s initial Lapse in Appropriations Contingency Plan provided for the first five business days of operations, when states that the department would remain open using Democrats’ Inflation Reduction Act funds.

Now, only 39,870 employees, or 53.6%, will remain working as the shutdown continues.

Last week Trump said roughly 750,000 federal workers nationwide were expected to be furloughed across agencies, with some potentially fired by his administration.

The layoffs come as earlier this year the IRS embarked on mass layoffs, spearheaded by the Department of Government Efficiency, affecting tens of thousands of workers. At the end of 2024, the agency employed roughly 100,000 workers — and currently hovers around 75,000.

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Inside the high-stakes battle over vaccine injury compensation, autism and public trust

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By Céline Gounder, KFF Health News

Department of Health and Human Services Secretary Robert F. Kennedy Jr. has floated a seismic idea: adding autism to the list of conditions covered by the Vaccine Injury Compensation Program. The program, known as VICP, provides a system for families to file claims against vaccine providers in cases in which they experience severe side effects. Kennedy has also suggested broadening the definitions of two serious brain conditions — encephalopathy and encephalitis — so that autism cases could qualify.

Either move, experts warn, would unleash a flood of claims, threatening the program’s financial stability and handing vaccine opponents a powerful new talking point.

Legally, HHS “is required to undergo notice and comment rulemaking to revise the table,” said Richard Hughes, a law firm partner who teaches at George Washington University. The “table” is a list of specific injuries that the U.S. government accepts as presumed to be caused by a vaccine if those injuries occur within a certain time window. If someone can show they meet the criteria, they have a simpler path to securing compensation without having to prove fault. Autism is not in the table because a link between vaccines and autism has been thoroughly debunked.

If autism is added, Hughes explained, the VICP could face “an exorbitant number of claims that would threaten the viability of the program.”

Asked about its possible plans, an HHS spokesperson told CBS News the agency does not comment on future or potential policy decisions.

Carole Johnson, former administrator of the Health Resources and Services Administration, which oversees VICP, cautioned that the system is already overburdened: “The backlog is not just a function of management, it’s built into the statute itself. That’s important context for any conversation about adding new categories of claims.”

Dorit Reiss, a law professor at the University of California College of the Law-San Francisco, said that any such change would be exploited: “This can, and likely will, be used to cast doubt on vaccines.”

Compensation without causation

The Vaccine Injury Compensation Program was born of crisis. In 1982, “Vaccine Roulette,” a television documentary, aired nationwide, alleging routine childhood shots were causing seizures, brain damage, and even sudden infant death. The program alarmed parents and triggered a surge of lawsuits against vaccine makers.

“That led to a flood of litigation against vaccine makers,” recalled Paul Offit, a pediatric infectious disease specialist and vaccine inventor at the University of Pennsylvania. “I mean, to the point that it drove them out of the business. … By the mid-1980s, there were $3.2 billion worth of lawsuits against these companies.”

Were it not for the VICP, Offit said, “We wouldn’t have vaccines for American children. The companies — it wasn’t worth it for them.”

The National Childhood Vaccine Injury Act of 1986 created a no-fault system. Families who believed a vaccine caused harm could file a claim; if the injury appeared on the table within a set time frame, compensation was automatic. If not, claimants could present medical evidence. The system had two purposes: provide compensation and protect the vaccine supply.

From the beginning, the table was understood not as a scientific document but as a legal tool.

“It’s a legal document and things can be included for policy reasons even if the causation evidence is weak,” Reiss said. She explained, “The program is designed to be generous, to compensate in cases of doubt.”

But, she said, “autism is not in that category. The science is clear. Adding it would be pure politics.”

This tension — between law, science, and public perception — has defined the program for nearly four decades.

What expansion would mean in practice

Since 1988, federal data shows more than 25,000 petitions to the VICP have been adjudicated; of those, 12,019 were granted compensation and 13,007 were dismissed. About 60% of compensated cases involved negotiated settlements in which HHS drew no conclusion about the cause. Over the same period, billions of vaccine doses were safely administered to millions of Americans.

Adding autism to the VICP table would change that picture overnight.

Federal estimates suggest up to 48,000 children could qualify immediately under a “profound autism” standard, with potential payouts averaging $2 million per case, at an initial cost of nearly $100 billion, followed by annual totals of about $30 billion a year — dwarfing the current $4 billion trust, a new analysis finds.

“Any case where the symptoms appeared in the past eight years and the parents blame vaccines,” Reiss said. “I don’t know how many that would be. The fund has a surplus of over $4 billion. One seriously disabled child’s care can cost millions, so a significant number, say 100,000 compensations, might exhaust it.”

Furthermore, with only eight special masters handling cases, the system would also be paralyzed by backlogs.

The stakes are not just fiscal. If the fund collapses under the weight of autism claims, vaccine makers may question whether producing vaccines for the U.S. market is worth the risk. That would mirror the crisis of the 1980s, which led to the establishment of the VICP.

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Autism and the courts

In the late 1990s and early 2000s, Andrew Wakefield’s now-retracted paper alleging a link between the MMR vaccine and autism fueled a surge of VICP claims. By 2002, the VICP was swamped with petitions alleging vaccines had caused autism. The court consolidated thousands of cases into the Omnibus Autism Proceedings, selecting a handful of test cases to decide them all.

After years of hearings and expert testimony, the conclusion was unequivocal: vaccines do not cause autism. In 2010, the court ruled against petitioners on every theory of causation. The U.S. Court of Federal Claims affirmed, and the Court of Appeals upheld, the decision.

“That precedent is binding,” said Richard Hughes, a vaccine law expert at George Washington University and former VICP legal counsel. “Autism was litigated thoroughly and rejected. That still carries weight in the court today.”

The ghost of Hannah Poling

Yet, the vaccine-autism debate has never quite faded. In 2008, the government conceded a case involving Hannah Poling, a girl with a rare mitochondrial disorder who developed autism-like symptoms after vaccination. Officials stressed the concession was specific to her condition, not evidence of a general link. But headlines told another story: “Family to Receive $1.5 Million in First-Ever Vaccine Autism Court Award.”

The Poling case fueled years of confusion.

Autism science today

The science is clearer than ever. Autism begins early in pregnancy, not in toddlerhood when most vaccines are given.

“Vaccinations … happened around the time families were recognizing symptoms of autism in their children,” said Catherine Lord, a UCLA clinical psychologist and specialist in autism diagnosis. “However, we now know that autism begins much earlier, likely as the fetus develops during pregnancy, so it cannot be an explanation.”

Peter Hotez, a pediatric infectious disease specialist and vaccine scientist at the Baylor College of Medicine who is also the father of a young adult with autism, underscores that point: “The drivers of autism are genetics and, in rare cases, environmental exposures during pregnancy, not vaccines. We’ve been over this ground for decades, and the evidence is overwhelming.”

Sarah Despres, former legal counsel to the secretary of Health and Human Services in the Biden administration and now a consultant to nonprofit organizations on immunization policy, adds that the compensation program itself is often misunderstood.

“The table was originally written as a political document,” she said. “The purpose of the program was to be swift, generous, and fair. … There would be cases that may not be caused by the vaccine but would be compensated if you went through this table injury scheme, where you don’t have to prove causation.”

What’s at risk: Harm from the diseases themselves

The stakes are not abstract. Measles, one of the most contagious pathogens on Earth, spreads so efficiently that one infected child can transmit it to 90% of susceptible contacts. Before vaccinations began in the 1960s, measles sickened hundreds of thousands annually in the U.S., killing hundreds and causing thousands of cases of encephalitis and lifelong disability. Complications included pneumonia, brain swelling, and, in rare cases, a fatal degenerative brain disorder called subacute sclerosing panencephalitis, or SSPE, that can strike years later. This year, a school-age child in Los Angeles County died of SSPE after contracting measles in infancy, before being eligible for vaccination.

Mumps was once a near-universal childhood illness. Though often dismissed as mild, it can cause sterility in men, meningitis, and permanent hearing loss. Outbreaks on college campuses, as recently as the 2000s, showed how quickly it can return when vaccination rates slip.

Rubella, also known as German measles, is mild in most children, but can be devastating during pregnancy. Congenital Rubella Syndrome, or CRS, caused waves of tragedy before the development of the vaccine: Thousands of babies each year were born blind, deaf, with heart defects, or with intellectual disabilities. In medical texts, autism itself is listed as one of CRS’ sequelae, or possible consequences — proof that rubella infection, not vaccination, can contribute to developmental disorders.

Measles, mumps, and rubella “are not trivial,” said Walt Orenstein, former head of the Centers for Disease Control and Prevention’s immunization program. “Fever, high fever, is common … and they have frequent complications.”

And yet, as these diseases fade from living memory, a counternarrative has gained traction. On Sept. 29, the nonprofit Physicians for Informed Consent, a group that disputes the scientific consensus on vaccines, announced it had mailed its “Silver Booklet” on vaccine safety to every member of Congress, as well as to President Donald Trump and Vice President JD Vance. The book claims that “vaccines are not proven to be safer than the diseases they intend to prevent,” and calls on federal leaders to punish states that restrict vaccine exemptions. (The booklet isn’t free. The group sells copies for $25 on Amazon.)

Scientists say this framing misrepresents the basic math of risk. “Measles is one of the most important infectious diseases in human history,” notes “Plotkin’s Vaccines,” the field’s authoritative textbook. “The widespread use of measles vaccines in the late 20th and early 21st centuries led to a further marked reduction in measles deaths. Measles vaccination averted an estimated 31.7 million deaths from 2000 to 2020.”

Kennedy’s possible move to expand the Vaccine Injury Compensation Program hinges on casting doubt — on suggesting that science is unsettled, that vaccines may be riskier than diseases.

“One tactic used to argue that vaccines cause autism is the use of compensation decisions from the National Vaccine Injury Compensation Program to claim such a link,” said Reiss of UC Law-San Francisco. “Even the cases that most closely address the question of vaccines and autism do not show the link that opponents claim exists, and many of the cases used are misrepresented and misused.”

Offit underscores the danger on the perception side. “When people see the Vaccine Injury Compensation program, they assume that any money that is given is because there was a vaccine injury,” he said.

Kathryn Edwards, an expert in pediatric infectious diseases and vaccine safety at Vanderbilt University, said, “Expanding compensation for issues that are not clearly related to vaccines … suggests that these conditions are related to vaccines when they are not.” She compared it to the removal of thimerosal, a preservative dropped from most childhood vaccines to ease public fears, despite no evidence of harm. “Now, we are still suffering from that action.”

Public health experts stress that such narratives invert reality. The very diseases being downplayed once killed or disabled tens of thousands of American children each year. As pediatrician, psychiatrist, and medical historian Howard Markel put it: “Back a hundred years ago, everybody lost a kid or knew a kid who died of one of these diseases. … We never conquer germs, we wrestle them to a draw. That’s the best we do. And so this is a real … handicap to the other side, the microbes who live to infect.”

Families and the future

The hardest voices to reckon with are those of families. Parents of autistic children often feel abandoned — unsupported by disability programs, exhausted by care needs, searching for answers. Kennedy’s appeal to them is emotional, not scientific.

Reiss noted that families deserve far more support but argues that it shouldn’t come through VICP.

“The program is to award compensation to those injured by vaccines,” she said. “We should have more direct support — disability funding, disability aid. Kennedy has been taking HHS in the opposite direction, cutting services where we need more.”

Despres made the same point: “The goal of the program really was if there’s a close call, we’re going to err on the side of compensation. … And it’s really important that everyone understands that compensation does not mean that the vaccine actually caused the injury. … And I think we have seen statistics around the compensation program misused by those who would want to sow distrust in vaccines, to say vaccines are unsafe, when in fact … that’s not what this is.”

UCLA’s Lord urged a shift in focus. “For the last 50 years, science has focused on the biological causes of autism, which has led to great progress, especially in genetics,” she said. Of Secretary Kennedy, she said, “He could help more by acknowledging the value of science, but also the need to better attend to the actual lives of autistic people and their families.”

What comes next?

If Kennedy decides to move forward with such a plan, HHS would need to draft a rule, open it to public comment, and then defend the change in court. The pushback will be fierce: from scientists, from public health leaders, and from families who fear being misled yet again.

The debate over adding autism to the Vaccine Injury Table is not just a policy debate. The program was built on the principle of compensation without causation, a fragile balance designed to sustain both trust and supply. Adding autism could collapse that distinction entirely.

©2025 KFF Health News. Distributed by Tribune Content Agency, LLC.