AI spending wasn't the biggest engine of U.S. economic growth in 2025, despite popular assumptions

Recent analyses challenge the widely held belief that artificial intelligence is the primary force behind the U.S. economy's resilience, especially in 2025. While AI has undeniably transformed market valuations and spurred significant investments, its contribution to the gross domestic product (GDP) is not as monumental as some narratives suggest. According to a January report from MRB Partners' U.S. economic strategist Prajakta Bhide, consumer spending emerged as the leading driver of GDP growth last year, a trend typical during economic expansions. AI-related capital expenditures ranked second in importance. "AI is a vital element of the growth narrative, but it is not the sole factor," Bhide explained in an interview with CNBC. She emphasized that without AI investments, GDP would not have plummeted as some might think, stating, "The U.S. consumer remains the key player in this growth story." Bhide's analysis indicated that AI-related components contributed approximately 0.9% to real GDP growth from the first to the third quarter of 2025, accounting for nearly 40% of the growth during that period. However, when factoring in imports of computers and related equipment, the net contribution of AI investments drops to about 20-25% of real GDP growth. GDP is determined by four main components: consumption, investment, government spending, and net exports. Imports are excluded from this measurement, which means the substantial imports of high-tech equipment diminish the perceived impact of AI on GDP. Notably, Bhide found that investments in software and computers were more influential for GDP growth than the much-discussed data centers. In her report, Bhide stated, "While a downturn in AI optimism poses risks to GDP growth, the adjusted estimates reveal that the U.S. economy would have still performed reasonably well without an AI boom, driven by robust personal consumption." Supporting this view, Bespoke Investment Group recently published findings that indicated AI spending contributed only 15% to quarterly GDP growth in the second and third quarters of 2025, with its overall share of GDP being under 5%. The final figure for U.S. GDP growth in 2025 is still pending, as annual revisions will be released later. The quarterly outcomes reflect a mixed narrative amid strong AI investment and fluctuating consumer demand, coupled with challenges like variable U.S. tariff policies. Notably, real GDP surged at an unexpected annual rate of 4.3% in the third quarter, following a 3.3% growth rate in the second quarter. However, the first quarter experienced a contraction of 0.3%, marking the first instance of negative growth since early 2022. Looking forward, Bhide anticipates that consumer spending will remain strong in 2026, despite potential slowdowns in income growth and increasing wealth concentration among the wealthy. "Fiscal support will help counterbalance slower aggregate income growth, and we believe the U.S. consumer is still in a strong position," she added. Bhide also noted that the narrative suggesting that only affluent individuals are driving consumption lacks substantial evidence, indicating that she does not foresee significant cyclical risks to consumption. As the economy evolves, Bhide predicts that growth will continue to be bolstered by further AI investments, potential Federal Reserve rate cuts, and stabilization in the unemployment rate, although she remains vigilant about productivity trends and job creation rates.