AI Could Keep US Out Of Recession For Years
Economists keep talking about headwinds. Among them are the jobs that AI will steal. Another is the tax that tariffs put on American households and businesses. However, investment in AI, mostly by huge tech companies, could reach the point where the investment level is $1 trillion a year. US GDP is about $29 trillion.
Tech companies, led by Amazon, Alphabet, Meta, Google and OpenAI will invest $300 billion in data centers this year. That will only be the start. Former Google chairman Eric Schmidt forecasts that AI will eat massive amounts of electricity. He recently commented, “Many people project demand for our industry will go from 3 percent to 99 percent of total generation… an additional 29 gigawatts by 2027 and 67 more gigawatts by 2030.” Other tech executives have given high numbers, but none higher than that.
GDP For The Grid
If AI is going to increase GDP, the question is how much? Current estimates are that the constitution this year will be under 1%. At $1 trillion, the figure could be 4% or higher. That figure would make it hard for the US to be pulled into recession by other factors.
It is too early to say how this AI investment could make its way through the economy. Certainly, for some period of time, there will be tens of thousand or more jobs created by constitutions of data centers, power sources, and grid upgrades. Some immediately put the largest data centers at a level similar to large cities. America’s grid is ancient. Upgrade means replacing or restoring millions of miles of line. Jobs at utilities will increase, but not by much.
AI spending is going to be stupendous. Whether it will replace jobs continues to be an open issue. That will give a tremendous boost to the US economy.
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