The United States economy is experiencing an unprecedented phenomenon where artificial intelligence spending has become the primary driver of economic growth, accounting for a staggering 92% of GDP expansion in the first half of 2025. According to Torsten Sløk, chief economist at Apollo Global Management, the massive capital expenditure companies are investing in AI data centers and infrastructure is not only offsetting the negative impacts of Donald Trump’s trade war but potentially masking underlying economic vulnerabilities.
Sløk argues that AI-related investments are creating powerful tailwinds that more than compensate for trade war-related drags on the economy. He points to several encouraging indicators: corporate default rates and consumer delinquency rates are both trending downward, trade war uncertainty has dropped significantly from its Liberation Day peak, and equity markets continue rising, boosting consumer spending. The economist describes an emerging “industrial renaissance” driven by AI technology and automation, with nearly 200 factory completions since mid-2023 and a $590 billion pipeline of megaprojects valued at $5 billion or more.
However, Harvard University professor Jason Furman offers a more cautionary perspective on this AI-driven growth. His analysis reveals that while investment in information processing equipment and software represents only 4% of GDP, it was responsible for 92% of all GDP growth during the first six months of 2025. This concentration raises critical questions about economic sustainability and what happens when AI spending inevitably moderates.
Analysts from Pantheon Macroeconomics have estimated that without AI spending, US economic growth would be less than 1%, a stark contrast to the Atlanta Fed’s latest third-quarter GDP growth estimate of 3.9%. This dramatic disparity highlights how heavily the economy currently depends on technology sector investments in artificial intelligence infrastructure.
Deutsche Bank has acknowledged that while tech companies are indeed propping up both markets and the broader economy, investors need to begin asking difficult questions about the long-term implications. The sustainability of this AI spending boom remains uncertain, and the economy’s heavy reliance on this single sector creates potential vulnerabilities. As companies continue building out AI data centers and the energy infrastructure required to power them, the question remains whether this investment will translate into productive economic returns or whether the economy is becoming dangerously dependent on what some fear could be an unsustainable spending trend.
Key Quotes
While the trade war remains a mild drag on growth, its impact is being more than offset by the tailwinds from the AI boom and the industrial renaissance. Consequently, there is a growing upside risk that economic growth will reaccelerate over the coming quarters.
Torsten Sløk, chief economist at Apollo Global Management, argues that AI spending is not just supporting the economy but could actually accelerate growth despite trade war headwinds, suggesting a more optimistic outlook than many economists hold.
Investment in information processing equipment & software is 4% of GDP. But it was responsible for 92% of GDP growth in the first half of this year.
Harvard professor Jason Furman highlights the extreme concentration of economic growth in AI-related technology spending, revealing how dependent the US economy has become on this single sector and raising concerns about sustainability.
With nearly 200 factory completions since mid-2023 and a $590 billion pipeline led by $5 billion-plus megaprojects, advanced manufacturing is set to be a durable growth engine for the US economy with positive spillovers to industrial real estate, private credit and nationwide employment.
Sløk describes the scale of the AI-driven industrial buildout, emphasizing the massive capital commitments and potential broader economic benefits, though this optimistic view contrasts with concerns about over-concentration in tech spending.
Our Take
The divergence between Sløk’s optimism and Furman’s caution reveals a fundamental debate about AI’s economic impact. While the $590 billion pipeline of AI infrastructure projects represents genuine investment and job creation, the 92% concentration figure is alarming from a risk management perspective. History shows that economies overly dependent on single sectors—whether housing in 2008 or dot-com stocks in 2000—face severe corrections when those sectors stumble.
The real question isn’t whether AI will transform the economy, but whether the current pace of spending reflects rational expectations about returns or speculative excess. If AI delivers on its productivity promises, this investment will look prescient. If it doesn’t, the US economy may face a significant reckoning. The fact that growth would be below 1% without AI spending suggests we’re already in that precarious position, making the stakes for AI’s success extraordinarily high.
Why This Matters
This story reveals a critical vulnerability in the US economic recovery and raises fundamental questions about the sustainability of current growth patterns. The fact that AI spending accounts for 92% of GDP growth indicates an economy heavily concentrated in a single sector, creating significant risk if that spending slows or fails to deliver expected returns. For businesses, this suggests that the AI boom is creating a temporary economic buffer that may not last, requiring careful strategic planning for a potential slowdown.
The implications extend beyond corporate boardrooms to broader economic policy and investment decisions. If AI infrastructure spending is masking underlying economic weakness, policymakers may be operating with an incomplete picture of the economy’s true health. For workers and society, the industrial renaissance Sløk describes could create new employment opportunities, but the concentration of growth in technology sectors may also exacerbate inequality and regional economic disparities.
Most importantly, this analysis forces a reckoning with the AI investment thesis itself: are these massive capital expenditures building sustainable economic value, or are they creating a bubble that could deflate rapidly? The answer will shape not just the tech industry but the entire US economy’s trajectory.
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Source: https://www.businessinsider.com/ai-spending-capex-tech-tariffs-gdp-growth-data-centers-2025-10