"Economists keep warning that the US economy is being propped up almost entirely by an enormous boom in the tech and AI sector. Should the rest of us be worried? Multibillion-dollar investments have become the norm as AI companies continue to double down on enormous infrastructure buildouts and talent acquisitions that they insist will undergird a new economy in which huge amounts of human labor are automated away."
"In a new research note, as Fortune reports, the international finance giant Deutsche Bank is warning that AI spending can't continue to increase exponentially. And if spending were to slow down without realizing the tech's outsize promises, the analysts caution, it could reveal an economy in tatters - marked by unemployment, lower household incomes, and inflation - that had been hidden by an irrational optimism in the power of AI."
""AI machines - in quite a literal sense - appear to be saving the US economy right now," Deutsche Bank head of FX Research George Saravelos wrote to clients. "In the absence of tech-related spending, the US would be close to, or in, recession this year." Current growth is also "not coming from AI itself but from building the factories to generate AI capacity," he added, suggesting that the tech industry is selling a still-hypothetical future rather than delivering a real one."
Massive AI and tech investments are driving current US economic growth through infrastructure buildouts and talent hires rather than immediate productivity gains. Deutsche Bank warns AI spending cannot grow exponentially forever and that a slowdown before promised automation benefits materialize could expose high unemployment, falling household incomes, and inflation. Nvidia's reported $100 billion commitment to OpenAI and large-scale data center plans exemplify the scale of current investments. Analysts argue the tech cycle's contribution to GDP depends on continued heavy capital spending, leaving the broader economy vulnerable if investor enthusiasm fades or automation gains fail to appear.
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