Managing AI’s Progress for Economic Stability

(SeaPRwire) –   President Donald Trump has described the current state of the U.S. economy as a “golden age,” and in some respects, he may be correct. The stock market is at record highs, and economic growth has been steady. Depending on who you are asking, much of this success can be attributed to one rapidly expanding industry: artificial intelligence (AI).

“Polls may indicate that AI isn’t widely popular, but economic growth certainly is,” said venture capitalist David Sacks. “At this point, halting progress in AI would be equivalent to bringing the U.S. economy to a standstill.”

Sacks, who recently stepped down from his role as Trump’s top advisor on cryptocurrency and AI in March, highlighted how deeply AI has become embedded in the U.S. economy, describing it as the key driver behind GDP growth.

“In the first quarter, AI already accounted for 75% of GDP growth. This trend is expected to continue,” Sacks wrote in an X post published on Sunday. “Technological leadership has always been America’s greatest strength, and it remains a major force propelling the economy forward.”

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One effective way to assess the health of the real economy is by closely monitoring consumer spending. Increased consumer spending typically signals confidence in disposable income and job security. Historically, consumer spending has been the largest contributor to overall economic activity.

This continues to hold true, according to data from the Bureau of Economic Analysis (BEA), which reported last week that consumer spending makes up 68.1% of GDP. However, it is no longer the primary engine of new economic growth. Last quarter, it contributed only 1.08 percentage points to GDP growth. Business investment surpassed it, adding 1.48 percentage points—and nearly all private investment in the U.S. today is linked to the AI boom.

The economic narrative of Trump’s second term has shifted away from broad manufacturing revival or widespread job creation, focusing instead on massive AI investments. According to the BEA, the largest categories of business investment last quarter were in technical equipment like computers and intellectual property products such as software. Combined, spending on information processing, hardware, software, and research and development in the first three months of the year contributed 1.52 percentage points to overall GDP growth, which stood at 2% last quarter.

In other words, AI-related expenditures so far this year account for more than three-quarters of all new economic activity.

These trends align with what Sacks aimed to achieve during his tenure as Trump’s AI advisor. As a proponent of deregulation, he led the administration’s AI Action Plan, which prioritized accelerating AI development and expanding infrastructure quickly. Near the end of his time in office, he met with tech leaders and lawmakers—reported by the Wall Street Journal—where he emphasized that AI was foundational to the U.S. economy, warning that slowing its advancement would cause significant harm to national economic growth.

These findings and comments from Sacks contrast sharply with statements made by certain administration officials about the state of the economy. Treasury Secretary Scott Bessent, in particular, has repeatedly promised a “blockbuster” year for the U.S. economy, citing new manufacturing investments and nationwide job growth. During a visit to a rare earth mineral processing plant in South Carolina last fall, Bessent predicted a “takeoff” for American manufacturing in 2026 and 2027.

While manufacturing output has shown signs of improvement recently, the anticipated surge in jobs has not materialized. In fact, the manufacturing sector lost nearly 110,000 jobs last year, according to a February report by a Senate committee.

Slow job growth is not limited to manufacturing. Last year marked one of the weakest periods for job creation in decades, with only 156,000 new positions added—a figure that would have been negative if not for the healthcare industry hiring approximately 375,000 additional workers.

This leaves AI as the central factor. With a fragile labor market, consumers would normally be expected to reduce spending, leading to slower economic growth. While consumer spending has indeed moderated, as shown by the latest BEA data, the economy continues to grow. Goldman Sachs analysts referred to this phenomenon in a report last October as “jobless growth,” where rising investment and productivity driven by AI offset weak labor market expansion.

For now, most new jobs tied to the AI boom are concentrated in just one sector: construction. A December study by the American Edge Project, a pro-technology advocacy group, identified nearly 2,800 data centers either announced or under construction across the U.S., expected to generate close to 700,000 permanent jobs and 4.7 million temporary positions.

But even these gains are short-lived. Research from Brookings indicates that the local economic benefits of large-scale data center projects diminish significantly after construction ends, with long-term operational employment remaining relatively small compared to the number of jobs created during the building phase.

Much now depends on AI’s ability to increase productivity and sustain economic momentum. Although Trump has spoken of a diversified economy operating at full capacity, for the moment, it functions almost exclusively along a single track, with little margin for error.