AI drives one-third of US economic growth despite limited adoption

Economist Mark Zandi argues that artificial intelligence has been a net positive for the U.S. economy since ChatGPT’s launch nearly three years ago, contributing more than one-third of real GDP growth over the past year. Despite concerns about job displacement, AI’s current economic impact stems primarily from massive infrastructure investments and soaring stock prices rather than widespread business adoption, which remains limited to fewer than 10% of companies.

What you should know: AI has provided crucial economic momentum during a period of policy uncertainty and potential headwinds.

• Without AI’s contribution, Zandi suggests the economy would likely be in or near recession given challenges from higher tariffs, restrictive immigration policies, and federal government cuts.
• The “magnificent seven” AI companies have seen stock prices surge 40% over the past year and 300% since ChatGPT’s debut, creating trillions in new wealth.
• This stock market boom has enabled wealthy Americans to increase consumer spending significantly, driving economic growth.

The job market reality: Contrary to widespread fears, AI hasn’t yet eliminated large numbers of jobs across the economy.

• Most business hiring caution stems from policy uncertainty rather than AI displacement, with companies waiting for Supreme Court decisions on economic policies before expanding.
• Young workers aged 20-24 face unemployment rates exceeding 9%, up more than 3 percentage points recently, though the connection to AI remains unclear.
• Labor force participation has actually declined in this age group despite rising unemployment.

Adoption challenges: Business integration of AI remains slow despite the technology’s potential.

• Less than one-tenth of U.S. companies have meaningfully incorporated AI into their workflows, with adoption concentrated among large corporations.
• Even information technology companies, expected to be heavy AI users, show adoption rates of only 25%.
• Companies face barriers including skills shortages, inadequate IT infrastructure, concerns about cannibalizing existing products, and unresolved compliance issues.

Historical perspective: Zandi draws parallels to previous technological revolutions to predict AI’s trajectory.

• Major technologies like electricity, internal combustion engines, personal computers, and the internet required years to reach full economic impact.
• The most significant disruption typically occurs when new businesses form specifically around the technology rather than when existing companies adapt.
• While AI adoption will likely happen faster than previous technologies, meaningful workforce disruption should occur slowly enough for worker retraining and job transitions.

Key risks ahead: The economist identifies two primary economic concerns about AI’s future impact.

• Overvalued AI stocks could crash if adoption rates disappoint euphoric investors, creating wealth destruction that would harm the broader economy.
• AI’s benefits may disproportionately flow to wealthy Americans, potentially worsening income inequality and intensifying political tensions between economic classes.

What he’s saying: “AI has not eliminated lots of jobs as feared, at least not yet,” Zandi writes, attributing current business caution more to policy uncertainty than technological displacement.

• “There will be disruptions as AI replaces some jobs, and the nature of work will change as AI assumes some of the more menial tasks done by workers. But all of this should happen slowly enough to allow disrupted workers to gain new skills and new jobs.”
• “When it comes to the economy, AI should be much more friend than foe.”