The Lead
Artificial intelligence has become a central force behind US economic expansion, according to recent comments from venture capitalist David Sacks, who warned that slowing its development could effectively stall the economy. His remarks come as data shows AI-linked investment now accounts for a dominant share of new economic activity.
The argument reflects a broader shift in how growth is being generated. While consumer spending remains the largest component of GDP, AI economic growth is increasingly tied to business investment, particularly in computing infrastructure, software, and research.
AI Investment Overtakes Traditional Growth Drivers
Recent figures from the Bureau of Economic Analysis indicate that consumer spending still makes up roughly 68 percent of US GDP. However, its contribution to recent growth has weakened, adding just over one percentage point in the latest quarter.
By contrast, business investment contributed more significantly, driven largely by spending on AI-related assets. Investment in computing equipment, software, and research collectively accounted for more than 1.5 percentage points of overall GDP growth in a quarter where total expansion reached around 2 percent.
Sacks has pointed to this shift as evidence that AI is now the backbone of economic momentum. In public remarks, he noted that AI-related activity accounted for a substantial majority of growth in the early part of the year, underscoring the sector’s rising influence.
His tenure advising Donald Trump on AI policy focused on accelerating development, including support for rapid infrastructure buildouts and fewer regulatory constraints. That approach has aligned with a surge in private sector spending aimed at scaling AI capabilities across industries.
A Growth Model Built on Technology, Not Jobs
The current expansion differs from previous cycles in one important way: employment gains have not kept pace with output. Manufacturing, often highlighted by policymakers as a source of future growth, has seen job losses rather than gains in recent periods.
Even broader labor market data points to a slowdown. Job creation has remained historically weak, with gains concentrated in a narrow set of sectors such as healthcare. This has led some economists to describe the current phase as “jobless growth,” where productivity gains and capital investment replace traditional hiring.
AI appears central to this pattern. While it is driving demand for construction linked to data centers, much of that employment is temporary. Studies from institutions such as Brookings suggest that once construction ends, long-term job creation tied to these facilities is relatively limited.
This dynamic raises questions about the sustainability of growth that relies heavily on capital expenditure rather than wage expansion. According to McKinsey, AI could add up to $4.4 trillion annually to global productivity over time, but the distribution of those gains across the workforce remains uncertain.
What It Means for the Next Phase of the Economy
The increasing dependence on AI investment leaves the US economy exposed to a narrower set of growth drivers. If spending in this sector slows, there are fewer alternative engines ready to compensate.
At the same time, policymakers face a balancing act. Efforts to regulate AI more tightly could address risks around labor displacement and market concentration, but they may also dampen the very investment currently supporting growth.
For now, the trajectory remains clear. Economic expansion is being sustained less by broad-based consumption or hiring and more by a concentrated wave of technological investment. Whether that model can deliver durable, inclusive growth will depend on how the next phase of AI adoption unfolds.
