The current AI spending boom is undeniably buoying the U.S. economy, yet a stern warning from Deutsche Bank suggests this fervent activity might be building on a precarious foundation. The bank's research highlights that unprecedented capital expenditures in artificial intelligence are single-handedly staving off a recession, but the disparity between this investment and actual productivity gains signals significant risks and potential long-term instability.
The AI Boom: A Foundation of Capex, Not Productivity
The sheer volume of capital expenditure in AI infrastructure has become an unparalleled driver of U.S. economic growth, surpassing even the dot-com era's peak in its contribution to GDP. Deutsche Bank notes that without this tech-driven spending on data centers, power supply, and high-grade equipment, U.S. real GDP growth would effectively be at zero. Goldman Sachs estimates AI-related capex hit $368 billion between early 2023 and August 2025, largely channeled into physical infrastructure. However, the crucial concern is that while construction workers are busy and equity markets are buoyant, the actual output and promised leap in productivity from AI software remain limited, creating a significant disconnect between investment and tangible economic benefits.
Looming Shortfalls and Unrealistic Expectations
Deutsche Bank cautions that the current trajectory of growth, which would require "parabolic" acceleration to continue, is mathematically improbable and unsustainable. This spending sprint, front-loaded with infrastructure build-out, is likely to slow once the physical construction plateaus. Further amplifying these concerns, consultancy Bain & Co. projects a staggering $800 billion annual revenue shortfall in the AI sector by 2030, even after factoring in efficiency gains, due to the immense demand for computing power. This revenue gap raises fears of overcapacity and squeezed margins, drawing unsettling parallels to the dot-com bubble burst. While a more measured outlook from Goldman Sachs suggests eventual productivity gains could provide a softer economic landing, Deutsche Bank maintains that these improvements are not materializing at a pace that justifies the current runaway spending, ultimately questioning whether the world is constructing a durable economic foundation or merely a multi-trillion-dollar house of cards.
