Artificial Intelligence Now Fuels Three-Quarters of U.S. Economic Growth
Washington, Tuesday, 5 May 2026.
Artificial intelligence drove a staggering 75% of U.S. economic growth in early 2026. This historic shift highlights how technology investments are rapidly outpacing traditional consumer spending.
The Capital Expenditure Surge Driving the Economy
Data released around April 27, 2026, by the Bureau of Economic Analysis revealed that the U.S. economy grew at a 2% annualized pace in the first quarter of the year [1][4]. While consumer spending has historically been the backbone of the economy—accounting for 68.1% of GDP—it contributed only 1.08 percentage points to this recent growth [1]. In stark contrast, business investment contributed 1.48 percentage points, with investments specifically in information processing, equipment, software, and research and development accounting for 1.52 percentage points of the overall 2% growth [1]. Former Trump AI advisor David Sacks, who stepped down from his role in March 2026, stated on May 3, 2026, that AI was responsible for 75% of this first-quarter GDP growth [1][4]. He bluntly noted that halting AI progress today would be “equivalent to halting the U.S. economy” [1][4].
Jobless Growth and the Labor Market Paradox
Despite this investment boom, the labor market presents a starkly different reality, validating a phenomenon Goldman Sachs researchers dubbed “jobless growth” in October 2025 [1]. During 2025, the U.S. economy added a mere 156,000 jobs, a figure that would have been negative without the healthcare sector contributing 375,000 new hires [1]. Traditional sectors suffered significant contractions; the manufacturing industry lost approximately 110,000 jobs in 2025 alone, according to a February 2026 Senate committee report [1]. This dynamic illustrates an economic environment where artificial intelligence drives significant productivity and capital investment, while human labor demand stagnates [1].
Geopolitics and Market Realities
The aggressive push for unhindered AI development is also deeply tied to international competition. Sacks previously warned on January 22, 2026, that America could lose the global AI race [1]. In a subsequent April 30, 2026, podcast interview, he expanded on this, stating that domestic fear of AI technology represents “probably the biggest threat to our winning the AI race” against China [3]. Having spearheaded the Trump administration’s AI Action Plan in 2025—which advocated for fast-tracking AI development—Sacks argues that public hesitation must take a backseat to economic and geopolitical necessities [1]. As he bluntly framed the situation, “polls may show that AI is not popular, but economic growth is” [4].