Artificial intelligence is now the dominant force driving US economic growth, accounting for over 75% of GDP expansion in the first quarter of 2024, according to David Sacks, former AI advisor to President Donald Trump. The surge in AI-related investment comes as manufacturing jobs continue to disappear, raising concerns about the uneven distribution of economic benefits.
AI dominates economic activity
The Bureau of Economic Analysis reports that AI-focused investments in information processing equipment, software, and research accounted for 1.52 percentage points of the 2% overall GDP growth last quarter. This dwarfs the impact of consumer spending, which added just 1.08 percentage points to GDP despite accounting for 68.1% of total economic activity.
'At this point, stopping progress in AI would be equivalent to halting the US economy,' Sacks wrote in a recent social media post, emphasizing the technology's critical role in maintaining America's economic leadership.
Manufacturing struggles persist
While AI investment booms, the manufacturing sector continues to shed jobs, losing nearly 110,000 positions last year. Treasury Secretary Scott Bessent's predictions of a manufacturing revival in 2026-2027 have yet to materialize, with overall job growth remaining historically weak across sectors.
The Trump administration's focus on deregulation and rapid AI infrastructure development, spearheaded by Sacks during his tenure as AI advisor, appears to be reshaping the US economy. However, questions remain about whether this AI-driven growth will translate into broader prosperity for American workers.