An Overly AI-Dependant Economy?
Invictus here. During Friday’s sell-off, I wanted to review the major economic factors to see whether the market is foreshadowing a slowdown or worse. The TL:DR: The United States is still growing, but at a slower pace. Compared with the 1990s, growth has become increasingly dependent on a narrower range of economic activity,… Read More The post An Overly AI-Dependant Economy? appeared first on…
During Friday's market sell-off, an examination of major economic factors suggests that the United States economy is growing at a slower pace, relying more heavily on a narrower range of economic activity. This dependence on information-processing equipment and software may make the economy more vulnerable to shocks. Comparing the growth periods from 1995-1999 and 2024 Q4-2026 Q3, it is evident that the contribution of technology-related investment to GDP growth has increased, while the contributions from other sectors have declined.
This shift in the composition of GDP indicates that the modern economy is less robust and more susceptible to disruptions compared to the 1990s. While the current AI-driven investment boom sustains today's economic growth, its long-term financial returns remain uncertain. An economy that heavily depends on a single investment cycle is exposed to the risks associated with that cycle.
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