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... According to Gregory Daco, the EY-Parthenon chief economist, the productivity gains that explain that divergence largely predate the AI boom. "Productivity growth protects margins, not income," Daco wrote in a note Thursday.

Economic output grew 1.7% in the second quarter, just based on 0.3% more hours. Compensation rose 2.6%, which, set against a spring and summer of oil-driven inflation, comes out to "flat to slight contraction" in real terms, Daco told Fortune in an interview.

Margins hit a record 14.9% of GDP, while the labor share fell to 52.8%, the lowest since the government started counting in 1947. Daco said that 50% isn't a floor. "As long as you continue to see concentrated gains on the capital side, and within a certain number of firms," labor's share could keep plummeting, he said. ...