Goldman Sachs says AI delivered 'basically zero' GDP growth despite massive tech spending

AI boosted US economy by 'basically zero' in 2025, says Goldman Sachs chief economist -- 'We think there's been a lot of misreporting of the impact that AI investment had on GDP growth'

US companies are spending big, but most of that money goes overseas. It's become a common narrative around the U.S. economy and AI firms: AI investment is propping up America. While there is an argument to be made that the stock market is, with the "Magnificent 7" tech firms making up a sizeable portion of the U.S. stock market's gains over the past year, that idea doesn't hold water with general economic growth. Indeed, Goldman Sach's latest insight into the AI industry's hundreds of billions of investment is that the effect on the U.S. economic growth so far is "basically zero," as WSJ reports. "We don't actually view AI investment as strongly growth positive," said Goldman Sachs chief economist, Jan Hatzius, during a recent interview. "We think there's been a lot of misreporting of the impact that AI investment had on GDP growth in 2025, and it's much smaller than it's often perceived." How much smaller? "Basically, zero," he said. Lots of investment everywhere else The problem when it comes to finding benefits to the U.S. economy is that most of the companies investing and receiving investment are spending that money overseas. While Nvidia might be based in the U.S., its manufacturing happens elsewhere. It gets the raw materials from other countries too, and as much as the U.S. is trying to improve American access to critical minerals in cutting-edge semiconductor manufacturing and expanding fabrication facilities on U.S. shores, it's not enough. TSMC can't bring 40% of its manufacturing base to America, which means that for the foreseeable future, Nvidia and everyone else will be buying the majority of their chips from Taiwan. Considering that's the major component investment for AI data centers, it's clear to see why spending several hundred billion on AI data center build-outs will actually mean spending hundreds of billions on TSMC fabbed hardware. WSJ's report suggests as much as three-quarters of the investment in building an AI data center goes on the computing components, and the majority of that is spent overseas. Where's the money going? The five top U.S. tech companies are collectively expected to spend as much as $700 billion on AI infrastructure in 2026. Although this is bolstering construction industries and leading to stretched electricity grids, it's barely moving the economic needle. "This is a big deal, but not the be-all and end-all," said economic analyst Joseph Politano, who calculates that of the U.S. economy's growth of 2.2 percent in 2025, only 0.2% of that is likely to have been down to AI investment, due to the monumental imports required. This might not be a problem if the AI companies themselves were turning a profit. If they were pulling in money from overseas and developing a successful, profitable global product off the back of their enormous investments. But they're not. OpenAI is the biggest capital-burning company in history, with even the latest (revised down) estimates of capital expenditure on AI infrastructure reaching $600 billion by 2030, and up to $1.4 trillion by 2033. All while the company's entire revenue for 2025 was less than $20 billion. Nvidia just massively scaled back its OpenAI investments from $100 million to maybe as much as $30 billion. J.P. Morgan claimed in November that AI needed to be pulling in over $600 billion in revenue each year to even get a 10% return on the enormous expenditures on infrastructure. Even OpenAI knows it can't afford its promises, which is why it's trying to build its own hardware. This is a clear example of the main criticism levied at these huge AI tech firms over the past year: They are not profitable. And now it turns out they aren't even making money for America. The stock price of Nvidia might be sky high, Oracle's founder might be worth hundreds of billions, Mark Zuckerberg might have convinced the Meta board to let him run another investment project, but none of that helps U.S. GDP. Indeed, it could even be dragging it down - especially since these companies risk a recession if the bubble pops. Paying for a possible future But that's worth the risk, as far as these companies are concerned. They have been promising for years that we're mere months away from AGI being developed. Or maybe years, but it's definitely coming. We also need to be ready for AI hacking, because that's a problem now, but don't worry, Anthropic is here to help. As much as the AI companies want us all to pay for and use their AI tools right now, a major part of their sales pitch to investors, to consumers, to politicians, and the world at large is that all this AI investment will be worth it. The models will keep scaling in capability, and all these hundreds of billions of investment will boost productivity so much that it will make it all worth it in the end. At least, that's the ideal that AI businesses are trying to sell to investors. But we're not seeing that yet. The economic impact is basically zero, the productivity gains are poor at best, and possibly actually make us worse workers. The scale of AI expenditure rolls on regardless, and the ongoing buildout and scale of investment will march on, toward a goalpost that's ill-defined, hedged on the promise that it'll change everything. But, for America, the economic impact might as well be nil.

Goldman Sachs says AI's impact on the US economy was "basically zero" last year

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. Bottom line: Experts continue to debate the real economic impact of artificial intelligence on traditional industries. Some analysts argue that large language model technology is already transforming many sectors, while others believe its measurable economic impact has so far been limited. Goldman Sachs analysts have suggested that the impact of AI on the US economy was "basically zero" in 2025. The investment bank argued that large language models, chatbots, and other AI-related technologies did not meaningfully contribute to the country's officially recorded 2.2 percent GDP growth last year. Unsurprisingly, the claim that AI is producing little measurable economic benefit in the world's largest economy is likely to fuel further debate about a potential AI market bubble. According to Goldman Sachs' Joseph Briggs, some recent projections about AI's economic impact rely on optimistic narratives that may obscure a deeper assessment of underlying trends. Analysts at Morgan Stanley, JPMorgan Chase, and other major financial institutions have expressed similar views, suggesting that much of the technology sector's growth may be indirectly benefiting manufacturing economies in Asia. Massive data center expansion plans announced by Amazon, Google, Microsoft, and other major technology companies will require significant supplies of computing hardware over the coming years. Analysts estimate that roughly three-quarters of Big Tech's projected capital expenditure could contribute directly to gross domestic product growth in Taiwan and other Asian technology manufacturing hubs. Over the past several years, successive US administrations have attempted - with limited success - to reduce the country's dependence on semiconductors and other computing components manufactured in Asia. Donald Trump has argued that AI investments are currently supporting US economic growth, while some state-level regulatory initiatives may, according to critics, risk constraining that growth engine. The number of investors and analysts warning about a potential AI bubble appears to be growing. Meanwhile, corporate executives have acknowledged that AI technology is not a magic productivity engine capable of dramatically accelerating efficiency or output. Some observers argue that replacing human taxpayers with software-based systems that do not contribute back to the broader economy could produce unintended long-term consequences. At the same time, other analysts continue to describe AI as the foundation of a new technological revolution. According to analyst Joseph Politano, the economic impact of AI has been overstated, though it remains significant. Chatbots and large language models contributed roughly 0.2 percent to last year's 2.2 percent GDP growth, Politano said. Much of the infrastructure required to support AI development is imported, making it difficult to precisely measure the technology's net contribution to individual segments of the US economy. Tax advisor Joe Brusuelas said that the economic effects of AI are difficult to estimate, and its contribution to 2025's GDP may eventually require revision. Critics, he said, are focusing too narrowly on specific details, while broader economic drivers remain uncertain. Everyone is "trying to peer through the fog to understand what is driving growth," Brusuelas added.

AI contributed 'basically zero' to the US economy last year, according to Goldman Sachs

Even with an influx of investments into AI by a myriad of tech companies, Goldman Sachs revealed a sobering reality about AI's impact on the US economy 2025 saw a wide array of big tech companies make sizable investments in AI. Among them are Amazon, Microsoft, Google, Meta, Nvidia, and countless others. With so much money pouring into the premier tech sector, most investors are parroting the belief that investing in AI has a net positive impact on the US economy. Based on a post on X by Jason Furman, a Harvard economics professor, "investment in information processing equipment & software is 4% of GDP. But it was responsible for 92% of GDP growth in the first half of this year. GDP excluding these categories grew at a 0.1% annual rate in H1." But according to Goldman Sachs Chief Economist Jan Hatzius, the heavy investment in AI from major tech companies hasn't resulted in economic growth for the US at all. According to Hatzius, no economic growth has come to the US as a result of major AI investments During an interview with the Atlantic Council, Hatzius proclaimed that all that spending on AI investments has resulted in "basically zero" contributions to the US GDP growth in 2025. He went on state that, "we don't actually view AI investment as strongly growth positive. I think there's a lot of misreporting, actually, of the impact AI investment had on U.S. GDP growth in 2025, and it's much smaller than is often perceived." Hatzius pointed to one of the leading reasons for the lack of economic growth in the US due to AI investments: the reliance on imported equipment used to power AI. "A lot of the AI investment that we're seeing in the U.S. adds to Taiwanese GDP, and it adds to Korean GDP but not really that much to U.S. GDP," he noted. Goldman Sachs' AI learnings aren't all bad, however. In a 2023 report, Goldman Sachs Research forecasted AI beginning to have a measurable impact on the US GDP and labor productivity in 2027. One of the main key points from that report noted that "AI could increase US productivity growth by 1.5 percentage points annually assuming widespread adoption over a 10-year period." A separate 2025 report pointed to an increase in workers being displaced as more companies adopt AI, sadly. "Innovation related to artificial intelligence (AI) could displace 6-7% of the US workforce if AI is widely adopted," the report pointed out. "But the impact is likely to be transitory as new job opportunities created by the technology ultimately put people to work in other capacities." Even with that half-troubling, half-hopeful outlook, that same report relieved some workers' fears as it remained skeptical about AI leading to a massive increase in layoffs over the next decade. Goldman Sachs estimated that "generative AI will raise the level of labor productivity in the US and other developed markets by around 15% when fully adopted and incorporated into regular production." The result of that is said to lead to a half-percent increase in the unemployment rate above its rate during the AI transition period. Bottom line Massive tech investments in AI have helped fuel market optimism, but recent comments from Goldman Sachs chief economist Jan Hatzius suggest the technology has yet to make a measurable contribution to U.S. productivity or GDP. That reality stands in contrast to investor enthusiasm and highlights the gap between AI's long-term potential and its near-term economic impact. For businesses, the takeaway may be less about slowing AI investment and more about balancing it with investments in workers, training and systems that help employees use the technology effectively. In the near term, productivity gains are more likely to come from how people use AI than from the technology alone. Follow Tom's Guide on Google News and add us as a preferred source to get our up-to-date news, analysis, and reviews in your feeds.

'Basically zero' -- top Goldman Sachs economist says AI barely had any positive effect on the US economy in 2025

* AI had "basically zero" impact on the US economy in 2025, top economist claims * No "tightening in the labor market" might be good for job certainty * Global AI infrastructure spend will rise to $758 billion by 2029, says IDC Despite AI spend being initially set to bolster US economic growth in 2025 (by as much as 92%, depending on the source and figures, per Washington Post), banking experts argue that AI's direct contribution to growth might actually have been negligible. Jan Hatzius, Chief Economist for Goldman Sachs, has argued AI investment has had "basically zero" effect on US GDP growth. Speaking with Atlantic Council, Hatzius explained some of the flaws in current reporting, including that the US GDP only counts domestic production by subtracting imports. How has AI actually affected the US economy? It's also worth noting that AI data centers rely heavily on imported components, with roughly 75% of the cost of a data center coming from imported parts. Because much of this hardware is manufactured in Asia, large AI spend may not actually be benefiting the US economy as much as initially perceived, by instead bolstering the economies of other nations. "We don't actually view AI investments as strongly growth positive," Hatzius said, concluding that "most AI equipment is imported." That being said, he still acknowledges that AI's impact still leans slightly positive - just far less than misrepresentations have previously indicated. Still, post-pandemic productivity boosts have correlated with the rise in AI deployment (though Hatzius doesn't go into the specifics of AI's impact on worker productivity), and further gains are also on the cards. With this in mind, experts predict no "tightening in the labor market," which could be good news for job security, but continued wage deceleration might not be such good news for workers' pockets. On the whole, there is no consensus on how much AI contributed to US economic growth in 2025, but broadly it's clear that continued spend will continue to accelerate the market more generally and, even if the US doesn't benefit drastically, other nations certainly will. IDC research backs this up, predicting that AI infrastructure spend could hit $758 billion by 2029 (the equivalent of $189.5 billion quarterly) - up from $82 billion in the last full calendar quarter. Follow TechRadar on Google News and add us as a preferred source to get our expert news, reviews, and opinion in your feeds. Make sure to click the Follow button! And of course you can also follow TechRadar on TikTok for news, reviews, unboxings in video form, and get regular updates from us on WhatsApp too.

Goldman finds 'no meaningful relationship between AI and productivity at the economywide level,' but a 30% boost for 2 specific use cases | Fortune

Corporate America is talking about artificial intelligence (AI) more than ever, but a new analysis by Goldman Sachs reveals a stark divide between boardroom hype and macroeconomic reality. In a research note analyzing fourth-quarter earnings, senior U.S. economist Ronnie Walker noted that discussions surrounding AI completely overshadowed what was fundamentally a strong quarter, with core corporate revenues (excluding the energy sector) growing by a robust 4.6% year-over-year. Amid this market fervor, Walker wrote that "we still do not find a meaningful relationship between productivity and AI adoption at the economywide level". However, the data reveals a substantial hint of something bigger to come: a median reported productivity gain of around 30% for two specific, localized use cases. Walker's analysis adds some real meat to a debate that has rocked Wall Street -- and many retail traders' portfolios -- as several viral doomsday essays about AI eating the economy trickled into actual stock-market volatility. AI executive Matt Shumer and the top finance Substack, Citrini Research, both warned that AI will be much more capable of doing white-collar work, and much sooner, than many people think. Top executives including Microsoft's Mustafa Suleyman ("human-level performance on most, if not all professional tasks" will be automated), Amazon's Andy Jassy ("you won't need as many human beings") and JPMorgan's Jamie Dimon ("now's the time to start thinking about it") added their voices to the chorus. Torsten Slok, the influential chief economist at Apollo Global Management, wrote in his Daily Spark on Saturday that "the dramatic change in recent weeks in the narrative in markets from 'the economy is strong' to 'we are all becoming unemployed' is truly remarkable." He argued that markets are beginning to believe the view of "techno-optimists" about AI's productive capabilities over the consensus of the Federal Reserve and economists. To a master-data-cruncher like Slok, it doesn't make much sense that AI expectations have "sparked a macro conversation about a coming rise in the unemployment rate," given that he sees no change in the "underlying incoming economic story of a strong U.S. economy driven by AI spending, the industrial renaissance and the One Big Beautiful Bill." Slok added that he thinks this narrative is wrong, that AI adoption will take much longer than the next 12 to 18 months mentioned in these viral essays, and the risk of an overheating economy is larger than, say, unemployment going to 10%. Goldman agreed with Slok at least that the vibes are pretty freaked out, titling its report "AI-nxiety," and highlighting how corporate chatter has far outpaced tangible implementation. A record 70% of S&P 500 management teams discussed AI on their quarterly calls, with 54% specifically framing the technology around productivity and efficiency. Yet, when it came to providing hard numbers, the narrative faltered, lending support to the research of Wharton management professor Peter Cappelli, who has embedded with several firms attempting AI adoption and previously told Fortune that the productivity gains are real, but getting there is really hard work and quite expensive to implement. Only 10% of S&P 500 management teams actually quantified AI's impact on specific use cases, Walker wrote, and a mere 1% quantified its impact on earnings. Furthermore, broader economic adoption remains sluggish. While half of the companies in the broader Russell 3000 discussed AI, U.S. Census survey data indicates that fewer than 20% of establishments are currently utilizing AI for any business functions. Here comes the "but." Despite the lack of an economy-wide macro impact, the firms that have successfully integrated and measured AI are reporting dramatic improvements. Goldman Sachs found that management teams quantifying AI-driven productivity impacts on specific tasks experienced a median gain of around 30%. In these targeted functions, the technology is already delivering on its transformative promises, significantly streamlining core business operations. Perhaps it's no mistake, then, that the doomsday predictions are coming from tech types who see firsthand how 30% of software development work is vanishing into the oncoming advance of the robots. Venture capital billionaire Marc Andreessen famously predicted over a decade ago that software would "eat the world," but software has found itself being consumed. Goldman offered some clues as to how much greater AI's appetite will be from here. Earnings data suggests to Goldman that localized productivity gains are already beginning to influence corporate hiring strategies, leading to a "nascent reluctance to hire in anticipation of potential productivity gains". Walker observed a modest but rising share of management teams explicitly mentioning AI when discussing hiring freezes or layoffs. The companies that discussed AI in the context of their workforce reduced their job openings by 12% over the past year, a steeper drop than the 8% reduction seen across all companies. While the current correlation between AI adoption and broad labor market outcomes remains small and statistically insignificant, Goldman's baseline forecast is that 6% to 7% of workers -- roughly 11 million jobs -- will eventually be displaced by AI automation over the long term. Even without widespread productivity gains, AI is drastically reshaping capital expenditure. The "hyperscalers" -- the massive tech companies providing cloud and AI infrastructure -- are driving an unprecedented spending boom. Analysts have revised their 2026 capex expectations for these tech giants to an astonishing $667 billion, a 24% increase from just the start of the earnings season and representing a 62% jump compared to 2025. Goldman Sachs anticipates that this AI spending will contribute roughly 1.5 percentage points to measured capex growth this year, though its net impact on overall GDP growth will be a minimal 0.1 to 0.2 percentage points due to a heavy reliance on imported capital goods. Ultimately, Goldman's findings paint a picture of an economy in transition. While Wall Street is consumed by "AI-nxiety" and tech giants pour hundreds of billions into infrastructure, the promised productivity revolution remains highly localized to software coders and customer service representatives. For the broader U.S. economy, the true macroeconomic benefits of the AI revolution have yet to arrive.

Businesses Bet Big on AI While Cutting Workers -- Economists Say That's Produced 'Zero Growth'

The gap between businesses' enormous spending on AI and its meager contributions to their growth and wider economic expansion became clearer this week as experts poured cold water on the tech's purportedly wonderous impacts. Economists provided a counternarrative to the promises of companies developing AI -- and their frenzied Wall Street backers -- about apps putting human productivity to shame. In the most recent critique, United States Federal Reserve Bank of Chicago President Austan Goolsbee noted on Tuesday that the work automating tools have "not been as big a driver of the economy as some have portrayed." That followed earlier comments by Goldman Sachs chief economist Jan Hatzius who bluntly stated that AI's contribution to 2025 GDP had been "basically zero." Those views starkly contrasts earlier estimates by some economists that AI had accounted for anywhere from 35 percent to 92 percent of U.S. economic growth during 2025. Much of that reasoning came as companies not only kept pouring money into the development, purchasing, and deployment of the apps, but also sunk hundreds of billions of dollars more into building data centers to power the tech, which requires enormous energy supplies to operate. But as Goolsby noted, much of the investing going into all that AI activity "is buying imported goods, so we need to subtract that to get the overall GDP effect."