AI Spending Boom Masks Stagnant US Economy, Analysts Warn
Deutsche Bank and other forecasters raise concerns that massive, unsustainable investment in AI infrastructure is creating a misleading picture of economic health.
A torrent of capital pouring into artificial intelligence infrastructure is artificially inflating U.S. economic growth, masking a near-stagnant underlying economy, according to a recent analysis from Deutsche Bank. The bank warns that without this unprecedented spending surge, real GDP growth would be hovering close to zero.
The research highlights a critical vulnerability in the current economic landscape, where massive corporate outlays for AI data centers and hardware are single-handedly propping up headline growth figures. This sentiment is echoed across Wall Street, with analysis from JPMorgan Chase showing AI-related capital expenditures contributed a staggering 1.1% to US GDP growth in the first half of 2025. Some economists have calculated that spending on AI data centers alone accounted for half of all US economic expansion from the second quarter of 2024 through mid-2025.
In their note, Deutsche Bank analysts cautioned that the economic boost is based on spending with "no guaranteed return." They argue that for this level of contribution to continue, the rate of investment would need to accelerate at a "parabolic" pace. The bank projects a potential investment shortfall of $800 billion by 2030 if the current pace falters, raising serious questions about the long-term return on investment for the trillions being deployed.
This boom is powerful but may be short-lived. Forecasters at Barclays project that the GDP contribution from AI-sensitive investments will reach its apex in 2025 before decelerating sharply. Their models predict the contribution will fall from a peak of 1.0 percentage point in 2025 to just 0.55 points in 2026 and a negligible 0.2 points by 2027, exposing a significant growth cliff if other economic sectors do not accelerate.
The central question for the economy is whether this firehose of capital will translate into the broad-based productivity gains promised by AI proponents. The spending is registered as a positive for GDP now, but the actual economic payoff remains largely theoretical. Skeptics worry about a repeat of past technology bubbles, where massive upfront investment failed to deliver immediate, economy-wide benefits.
Daron Acemoglu, an institute professor at MIT, offers a more tempered outlook, estimating the GDP boost from AI is more likely to be a modest 1% spread over the next decade. This perspective clashes with the market euphoria priced into AI-related stocks, suggesting a potential disconnect between investor expectations and economic reality.
For now, the U.S. economy appears robust, buoyed by an AI gold rush that has powered the stock market and kept recession fears at bay. However, this analysis from leading financial institutions suggests the foundation of that growth is narrower and more precarious than headline numbers suggest. Investors and policymakers will be watching closely to see if the promised AI-driven productivity boom materializes before the investment boom inevitably cools.