Artificial intelligence (AI) is driving the expansion of the US economy, and in recent months that expansion has shown signs of accelerating.
Economists expect data to be released on October 29 to show that US gross domestic product (GDP) growth in the third quarter hit its fastest pace in a year.
AI does not appear as a separate line item in the GDP report, but its influence cuts across multiple categories.
AI contributes to GDP through several channels, including the billions of dollars in direct investment that technology companies are pouring into the technology, the data center construction boom that followed, and the boost to consumer spending from the stock market rally that AI has fueled.
So how large is AI's contribution to GDP? There is disagreement on this question. Some economists see the impact as modest, while others calculate a significant contribution.
Goldman Sachs Group offers a relatively conservative estimate. Its economists say AI's impact is constrained by a range of factors, including AI-related imports and inflation, as well as the crowding-out effect of AI on investment in other parts of the economy. Goldman Sachs estimates that over the past year AI contributed 0.1 percentage points to GDP. From the second quarter of 2025 to the second quarter of 2026, the US economy grew 2.2%.
A working paper published by the Federal Reserve in July examined business investment in software, data centers, power facilities, and computers and peripherals, concluding that AI-related gains were uneven across quarters but, on a one-year basis, accounted for about one-fifth of overall GDP growth.
The economics team at Nationwide Mutual Insurance estimates that over the past year, direct AI investment plus spillover effects — such as job growth from data center construction and the wealth created by the AI-driven stock market boom — contributed 0.6 percentage points to GDP, about one-quarter of overall growth. "That's quite substantial," said chief economist Kathy Bostjancic.
ING Group expects the US economy to grow about 2.4% in 2026, with the direct and indirect effects of AI contributing about 0.8 percentage points, or one-third. Bloomberg Economics, meanwhile, argues that official statistics understate AI's contribution to GDP. Its estimates show that if government statisticians could better capture the technology's impact, US economic growth in 2025 would have been a stronger 3.1%, rather than the recorded 2.3%.
How large is US investment in AI?
AI is expected to become the largest investment in US history. Stijn Van Nieuwerburgh, a professor of finance and real estate at Columbia Business School, predicts that from 2025 to 2032, total AI-related investment in data centers, power infrastructure, chips and computer equipment will reach $10.3 trillion, about 3.6% of US GDP each year. That share would exceed the proportion of GDP historically spent on canals, railways, electrification, highways or internet infrastructure. The largest of these, railway construction from 1870 to 1890, accounted for about 2.2% of GDP.
Where is AI's quantifiable impact on GDP most evident?
Spending on software, data centers, chips, computers and power infrastructure is most clearly reflected in the equipment and intellectual property line items of the GDP report. However, a considerable portion of the spending underpinning the AI boom goes to components manufactured outside the United States, such as chips, computers and computer equipment. US government statisticians record the billions of dollars spent on AI goods and services and then subtract the portion produced overseas from the GDP calculation, because GDP measures only domestic production. As a result, AI-related imports drag down the headline measure of economic growth.
How does AI affect consumer spending?
Through the so-called "wealth effect," Americans spend more when their wealth grows, even if much of that wealth is only on paper. Since 2024, the stock market has repeatedly hit record highs, partly because of investors' bets on AI. The result: US household wealth rose to a record high in the second quarter of this year. Admittedly, not all stock market gains come from AI, and not everyone benefits from rising share prices. The wealthiest 10% of Americans hold about two-thirds of household wealth, while the bottom half holds just over 2% of total wealth. But wealthier Americans tend to own stocks and are driving consumer spending, which is a key engine of economic growth. Some estimates suggest that about half of AI's contribution to economic growth comes from the wealth effect. "We are seeing high-income households continue to spend strongly. They have income and they hold wealth. Lower- and middle-income households feel greater financial pressure from weak wage growth and rising living costs," said James Knightley, chief international economist at ING.
What would happen to the economy if AI investment fell back?
"It is flattering GDP growth, but it is not everything," said Thomas Ryan, senior North America economist at Capital Economics. Other pillars of the economy include the healthcare industry, which has contributed about three-quarters of new jobs over the past year. Surveys show that US factories have been adding workers in recent months as output rises. Companies across US industries have also reported strong profits. Even so, an AI slowdown could still have a huge impact on the economy. In that scenario, business investment would slow. If stock values stopped growing or shrank, the wealth effect would reverse. The labor market could also be affected. For example, AI is supporting the construction industry. Since the fall of 2024, residential builders have cut 97,500 jobs. But data center construction has pushed nonresidential building to a record high, enough to offset the job losses at residential builders.
What is AI's long-term impact on the economy?
That is a huge unknown. AI leader Anthropic PBC said in its listing document that AI could pose an "existential threat" to humanity, or it could "accelerate global growth and significantly improve the quality of life for people around the world." So far, AI's impact on productivity has not been obvious. But the technology appears to have begun affecting parts of the labor market, with some studies showing it is reducing hiring of entry-level job seekers in fields such as software development and customer support. A study by consulting firm McKinsey & Company predicts that over the next decade, AI could force about 11 million American workers to find new jobs. "Even in the best-case scenario, the transition to the new AI era will be one of the most turbulent periods in human history," Microsoft co-founder Bill Gates wrote in an article in August. He said, "There will be some new jobs, but without the right policies, the number of new jobs will be far smaller than today's." Although disruptive changes may occur in the medium term, many economists and policymakers predict that AI will deliver rich returns over the long run. Federal Reserve Governor Lisa Cook said in a September speech: "In the long run, I am optimistic that AI-driven productivity growth can raise living standards for all Americans."
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