Artificial intelligence (AI)-related developments could be driving around one-third of America’s economic growth.
That’s according to a report Tuesday (Aug. 4) from the Wall Street Journal (WSJ), which pointed to three factors behind this trend.
First, there are the tech companies spending and borrowing billions of dollars to satisfy their AI computing needs. Secondly, there is the wave of data center projects, which is fueling construction spending, hiring and municipal revenues. Finally, an AI-related stock market rally has increased household wealth, helping to drive consumer spending.
“Without this investment boom, I think it’s pretty clear the economy would be running cooler,” said Michael Pearce, an economist at Oxford Economics, the source of the one-third figure.
“It is very much an AI-driven economy right now,” added Barclays economist Jonathan Millar. “It’s hard to imagine that we would be anywhere near as resilient without that impetus.”
The report also noted that AI could be swallowing so many resources it has begun to crowd out other areas of the economy. For instance, the land, materials and construction being used for data centers might be put to use elsewhere.
“You can’t just take out AI and leave everything else unchanged,” said JPMorgan Chase economist Michael Feroli. “The activity and the financial exuberance associated with AI might be squeezing out activity.”
AI is also contributing to inflation, the WSJ added, sapping consumers’ spending power. For example, the next version of the iPhone might cost less if the price of memory chips were lower.
In other AI news, the new PYMNTS Intelligence report “How Services Enterprises Are Putting New Forms of AI to Work,” examines rates of artificial intelligence in three industries: finance, health/medicine and media/advertising.
“National survey evidence shows generative AI, a less sophisticated tool than fully autonomous agentic AI, being adopted as rapidly as personal computers were in the 1980s, with potential but uncertain productivity growth implications,” that report said. “Yet its diffusion across companies varies widely. And still, amid that variation, enterprises consistently award high marks to AI’s value.”
Nearly all companies across the three industry groups reported that AI is performing well in areas where it has been deployed, generating a positive return on their investments over the last 12 months.
“Almost all firms say they’re now getting at least some financial return on their uses of new AI, but almost none say the investment has fully paid off,” the report added. “Just 5% to 10% say they’re currently getting a full return. At least half of firms in every industry group date full payback at five to six years.”
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