Take data center construction out of the equation, and GDP growth was 0.1%!

[thewayne]

Or, for all intents and purposes, zero.

And how much of that was spurred by the artificial intelligence bubble? Um, pretty much all of it.

From the Slashdot summary:
"U.S. GDP growth in the first half of 2025 was driven almost entirely by investment in data centers and information processing technology. The GDP growth would have been just 0.1% on an annualized basis without these technology-related categories, according to Harvard economist Jason Furman. Investment in information-processing equipment and software accounted for only 4% of U.S. GDP during this period but represented 92% of GDP growth.

Renaissance Macro Research estimated in August that the dollar value contributed to GDP growth by AI data-center buildout had surpassed U.S. consumer spending for the first time. Consumer spending makes up two-thirds of GDP. Tech giants including Microsoft, Google, Amazon, Meta and Nvidia poured tens of billions of dollars into building and upgrading data centers. (emphasis mine)

Let me repeat that. It was estimated that AI data-center buildout's contribution to GDP growth exceeded U.S. consumer spending in August.

So I guess we have an artificial economy, there's certainly no intelligent planning behind it in Washington, not that we do anything resembling central planning. Of course, that's obvious with the tariffs and cancelling renewable energy projects and destroying the federal government from the inside-out.

I previously posted about the AI bubble actually being three bubbles, according to one prognosticator. Which means when those bubbles start bursting, to varying degrees, data center construction will collapse. Which means GDP is going to crater in an absolutely huge way.

Fun times ahead! Might want to pick up a couple of cases of beans. And, of course, a can opener.

https://fortune.com/2025/10/07/data-centers-gdp-growth-zero-first-half-2025-jason-furman-harvard-economist/

https://slashdot.org/story/25/10/07/2012240/without-data-centers-gdp-growth-was-01-in-the-first-half-of-2025-harvard-economist-says

Comments

Also ...

[ysabetwordsmith]

Data centers use massive amounts of energy and water at a time when we need to reduce that use to mitigate climate change.

They also fob off their expenses on other customers. They can get away with this for a while, except...

In a lot of places there is an elected board that sets energy prices and approves or declines builds like data centers.

So, tell consumers that data centers will spike their water and electricity bills. Provide sample cases to demonstrate this. Tell them they can vote for representatives who pledge to keep rates low and block data centers.

[disneydream06]

I think Minnesota was suppose to be getting a big DATA center, but it got cancelled. :o
Hugs, Jon

[arlie]

From the POV of most executives, LLM's are huge. They'll be able to replace skilled humans with Artificial Intelligence (TM), and save not just the salaries, but all the other costs that go along with it. Sure, current LLMs have issues, and can't meet human standards, but"everyone" non-technical "knows" that this is just a matter of incremental improvement, sure to happen soon. Even if products and service degrade, CEOs can easily justify the tradeoff, provided their competition provides nothing better than they do.

So from where they sit, eating lotus, there's no problem here, and the free market (TM) is working as it should. Some of us might just know better, but remember that "markets can remain irrational longer than you can remain solvent" (Keynes). This dis-improvement wave could go on for quite a while, perhaps long enough that most young people can't imagine that better was ever possible, let alone routine.

Meanwhile, or course, even more humans become under- or un- employed, while The Economy (TM) soars.

[thewayne]

While The Economy ignores the fact that the unemployed people can't buy the products that it's selling.  It's a weird old world we're in.

[warriorsavant]

The problem is that all can openers you can buy now are internet enabled.

Back "in the day," each box of C-rations (military field rations before MRE's) came with a P38 can opener, less than an inch, which folded, with a hole to put it on your dog tags. I kept that, and a USB stick on my dog tags, showing I covered two different eras in the Army.

On a more serious note, combining this post with your next one about collapsing any goLLuMs... we're screwed even more than we thought we were.

[thewayne]

I know the exact type of can opener that you're talking about!  And I keep a 256 gig flash drive on my key chain that flips to have both a USB-A and -C ports on it.  Yeah, the LLM madness is more than a bit disturbing, and at so many levels.

[silveradept]

In a sensible world, policymakers would look at that and go "these people have both too much time and money on their hands, therefore we should redistribute their money so that the economy doesn't crash when they do."

But that would require electeds who aren't beholden to those same rich people.

[thewayne]

Yes, therein is the rub.