Goldman Sachs: Why AI Spending Is Not Boosting GDP
- Reference: 0176626705
- News link: https://slashdot.org/story/25/03/06/0619224/goldman-sachs-why-ai-spending-is-not-boosting-gdp
- Source link:
> Annualized revenue for public companies exposed to the build-out of AI infrastructure increased by over $340 billion from 2022 through 2024Q4 (and is projected to increase by almost $580 billion by end-2025). In contrast, annualized real investment in AI-related categories in the US GDP accounts has only risen by $42 billion over the same period. This sharp divergence has prompted questions from investors about why US GDP is not receiving a larger boost from AI.
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> A large share of the nominal revenue increase reported by public companies reflects cost inflation (particularly for semiconductors) and foreign revenue, neither of which should boost real US GDP. Indeed, we find that margin expansion ($30 billion) and increased revenue from other countries ($130 billion) account for around half of the publicly reported AI spending surge.
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> That said, the BEA's (Bureau of Economic Analysis) methodology potentially understates the impact of AI-related investment on real GDP by around $100 billion. Manufacturing shipments and net imports imply that US semiconductor supply has increased by over $35 billion since 2022, but the BEA records semiconductor purchases as intermediate inputs rather than investment (since semiconductors have historically been embedded in products that are later resold) and therefore excludes them from GDP. Cloud services used to train and support AI models are similarly mostly recorded as intermediate inputs.
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> Combined, we find that these explanations can explain most of the AI investment discrepancy, with only $50 billion unexplained. Looking ahead, we see more scope for AI-related investment to provide a moderate boost to real US GDP in 2025 since AI investment should broaden to categories like data centers, servers and networking hardware, and utilities that will likely be captured as real investment. However, we expect the bulk of investment in semiconductors and cloud computing will remain unmeasured barring changes to US national account methodology.
Because it isn't increasing productivity (Score:3)
AI investment isn't magical new money being created just for AI. If AI didn't exist, that money would still be invested, it would just be invested in other things. So investing money in AI won't raise the GDP unless AI itself manages to raise the GDP. Of the three factors of production, AI effects only labor. By either replacing people or making people more productive it would reduce labor cost allowing people to do more work. Thus far, it isn't achieving this on a large scale (there are probably individual cases where it has, but they're minor). Until AI actually makes people do more, it won't increase the GDP. Which may or may not ever occur, but it definitely isn't there yet.
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Indeed, by definition AI takes away human labor, leading to less human economic activity. Unless AI starts earning adn spending money for itself, GDP is on a downward course.
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What about the stock market returns produced by AI which is not counted in GDP but actually buys stuff (like cloud computing which isn't included in final output according to GS)?
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Why ignore that banks expand their balance sheets to create money, and if AI companies give them good pitches, they can in fact magicalky create money just for AI that they mighg not have created otherwise?
In short why ignore finance in your zero-sum story of investment?
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Well, they create money by giving loans ("inside money creation"). That money is destroyed when it's paid back, so I think in terms of GDP it's neutral?
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It would be if there was no interest on the loans.
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Can the AI companies pay off loan interest with stock market gains from the hype they've created around AI?
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Well no bank (beond the central bank) can create currency (if they did the CEOs would soon find them selves in jail for counterfeiting, they are however instrumental in distributing what ever currency (both physical an electronic) create by the central bank in question. Note i say currency not monne, we have not had money since the gold standard was dropped, Money in thiis context is base on the value of somthing physical (often on gold bolson kept in a vault somewhere), so robbers shuld really stopp shouti
Post-scarcity economy. (Score:2)
The ultimate end-game of capitalism: Its own decommission.
Because it's another tech investment bubble (Score:1)
Like crypto, metaverse, its all promise and little or no practical value. Scams enabled by Social Media, a great tool for marketing, fakes and lies, creating value where there is little, like a Trump
Where's the end user? (Score:2)
Data centres, servers, networking gear - that's all in order to be able to supply AI. Where's the actual use of it contributing?
Can you understate AI investment? (Score:2)
Just asking