Goldman Sachs, Morgan Stanley Calculate AI's Contribution To U.S. Growth May Be Basically Zero
- Reference: 0180846094
- News link: https://news.slashdot.org/story/26/02/23/1342216/goldman-sachs-morgan-stanley-calculate-ais-contribution-to-us-growth-may-be-basically-zero
- Source link:
[2]non-paywalled source
at Goldman Sachs, Morgan Stanley and JPMorgan Chase, all of whom now calculate that the AI buildup's direct contribution to growth was dramatically overstated and possibly close to zero.The debate hinges on how GDP accounts for imported components: roughly three-quarters of AI data center costs go toward computer chips and gear largely manufactured in Asia, and that spending gets subtracted from domestic output because it boosts foreign economies. Joseph Politano of the Apricitas Economics newsletter pegs AI's actual contribution at about 0.2 percentage points of the 2.2 percent U.S. growth in 2025, and even Hannah Rubinton at the St. Louis Fed -- whose own analysis attributed 39 percent of growth to AI-related business spending through the first nine months of the year -- acknowledges that figure is probably the ceiling. "It's not like AI is propping up the economy," Rubinton said.
[1] https://www.washingtonpost.com/technology/2026/02/23/ai-economic-growth-gdp-mirage/
[2] https://www.msn.com/en-us/money/markets/this-economic-idea-transfixed-wall-street-and-washington-it-may-be-a-mirage/ar-AA1WTiHO
That's about server investments (Score:2)
That's not about AI itself generating value. The money spent on new server farms increases the GDP.
Re:That's about server investments (Score:5, Interesting)
I think what they're saying is that to build a server farm in the USA, you need a lot of materials from other countries, which improves their GDP too. As a result, it doesn't extend the USA's economic lead over the world at all - it's "basically zero".
It's a little confusing what they're reaching for - there's GDP and there's relative GDP (or growth and relative growth, to take TFA's terminology) - the first does look like it'll go up, but the second appears not to be.
They also don't go into the outsized proportion of the US economy that is related to AI build-outs. If those build-outs stop or even slow down, what effect will that have on the wider economy, or indeed that of other countries around the world?
Re: (Score:3)
Yes, that's a bit more complex and one has to be specific what they talk about.
What I mean is, the contribution of AI to the GDP lies in the construction of data centers, not in a productivity gain caused by AI. And I believe the calculations according to which the US had nearly no other economic growth. This could mean that it is just wasted money spent on servers because of a hype.
Re: (Score:2)
It also means what we already knew, that GDP is not a useful measurement of the health of an economy, which depends on sustainability. If GDP is predicated upon selling out the future, for example by destroying jobs which ultimately support not only people but also their spending, it will have disastrous effects on GDP in the future.
Re: That's about server investments (Score:1)
No. GDP tells you what your combined economic outputs are. Selling something that already existed does not add to GDP.
To put this into terms you can understand: When your partner diarrheas into your mouth, they produced something that you place high value upon. That's the product. How much of it you swallow vs how much of it spills down your chin doesn't matter because it's not measuring inputs. Whatever you do or do not scrape up off of the floor and sell overseas to serviscope_minor likewise doesn't affec
Re: (Score:2)
I think the summary or article is making an unnecessary mess of things. They aren't talking about relative GDP, they're trying and failing to indicate the difference between GDP (production inside the nation's borders), and GNP (including what its citizens produce outside the borders). If my sleepless brain is pulling the info correctly, when TSMC produces Nvidia's chips, that counts towards America's GNP and Taiwan's GDP.
But it may not be. I've already made a few dumb mistakes today.
A negative bubble (Score:3)
Meaning, the stock market frenzy is purely a result of hype and people throwing cash around.
That's good for billionaires and millionaires but as [1]hunter44102 [slashdot.org] explains, the real consequences are damaging the economy.
[1] https://news.slashdot.org/comments.pl?sid=23923448&cid=66005288
Re: (Score:2)
You could argue that the stock market has always been about hype and people throwing cash around. One of the first centralized gambling markets.
Implementing new infrastructure has a cost (Score:2)
This will drag growth down, until it is fully implemented and then provides benefits that offset the cost.
So when energy is factored in (Score:1)
It's absolutely a DRAIN on the economy, as expected?
Oh, how does that get factored into GDP? (Score:2)
"roughly three-quarters of AI data center costs go toward computer chips and gear largely manufactured in Asia, and that spending gets subtracted from domestic output because it boosts foreign economies."
Okay, but, those things built in Asia were designed in the US, and that's where the profit largely ends up. Subtract the costs in Asia (payroll, facilities...) from Nvidia's revenue and where should the rest be counted?
Doh. (Score:2)
Come to think of it, I may just be forgetting about GNP and how it differs from GDP.
Negative growth (Score:3, Insightful)
Ai is negative growth. We are replacing taxpayers with machines who not only dont pay taxes but they dont spend money like consumers
Re: (Score:2)
paying taxes is also negative growth, so that part doesnt even matter.
The reason for "AI" causing zero gain is because its not "AI"; its not people, its not independent economic actors with agencies.
The name "AI" is nothing but a marketing gimmick, a lie.
What we have are just tools; helpers. And like any tool, the best they can be is productivity enhancers for people. But what these tools excel at is mostly economically unimportant work; shoddy art, boilerplate text, remixed music. So they make something wi
Re: (Score:2)
> Even if every single B-grade graphic artist, musician, and every contract and legal functionary gets put out of work by these babble generators, no real economic impact would be felt because those fields never contributed much, so the people freed from such work would quickly find economically equivalent work of any kind.
Every single part of this sentence is unsupported and, when you consider it, turns out to be wrong.
The most important part which is wrong however is the idea that people who never contributed much would easily find economically equivalent work. This is totally bonkers bullshit with not even the slightest basis in reality. If their entire class of work is being eliminated, then there aren't going to be jobs for any of them to find, let alone all or even most of them.
Re: (Score:3)
Plus, it doesn't take into account how wages/income are actually spent on services, food, goods, rent, insurance and other stuff that props up a myriad of other industries which in turn props up other industries. Unemployed people tend to only spend money on the most critical necessities.
Anyone with a modicum of knowledge about economics can see how replacing people with AI will affect local, national and eventually the global economy negatively. It will be a race to the bottom when companies starts feeling
Re: (Score:3)
{ Machine looms | Railroads | Electricity | Automobiles } is negative growth. We are replacing taxpayers with machines who not only dont pay taxes but they dont spend money like consumers
The problem with your claim is that it is was said about almost every new technology. But in the end those technologies created more jobs than were destroyed. At present, we simply don't know to what, if any, extent this will be true of AI. Get back to us in a couple of decades.