Worried about an AI bubble? A new report suggests that AI will not be the main force supporting the economy in 2025.
Macro Research Board Partners, an economic research platform, released a report to the contrary in January. The general idea is that AI is the main driver of GDP, and that “narrowly focused” and “highly fragile” growth will weigh on the overall economy once it stagnates.
“The bottom line is that without the AI boom, GDP growth would certainly have been lower last year, but imports would have also been lower, so overall real growth would still have been decent,” said economic strategist Prajakta Bhide, who wrote the report.
Bhide told Business Insider that personal consumption, or spending by everyday people, is the main pillar of GDP growth in 2025, and despite the amount of investment in AI infrastructure, a lot of high-tech equipment is imported and imports do not contribute to GDP.
The main categories counted in GDP are personal consumption, private domestic investment, government spending, and net exports.
“Consumers continue to be the backbone of the economy,” Beede told Business Insider. “Gross income growth is lower than before, and so is employment growth, which is impacting consumer sentiment. But there is a disconnect between what consumers say and what they feel.” They say they are going to do something versus what they have actually done. ”
According to the report, AI growth is an important secondary driver of GDP growth, but most of it comes from software investments, with the contribution of data centers being “negligible.”
“While a negative shock to optimism around AI represents a risk to GDP growth, a more realistic (and smaller) estimate of the import-adjusted growth impact of AI dispels the common notion that the U.S. economy would be weaker without it,” Beede said in the report.
Concerns about the AI bubble are not just about GDP, but also about the stock market and people’s retirement savings. Eight of America’s most valuable publicly traded companies, including Nvidia, Alphabet, and Apple, are all betting big on AI, with a combined value of $22 trillion.
Business Insider previously reported that historically, a decline in consumer spending has rarely triggered an economic downturn. Rather, spending weakens only after job losses increase or when a recession is already underway.
