Spending on AI data centers is so massive that it’s taken a bigger chunk of GDP growth than shopping—and it could crash the American economy
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As Rusty Foster, author of the widely read media blog Today in Tabs, puts it: “Our economy might just be three AI data centers in a trench coat.”
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investment
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August 6, 2025
03:01 PM
Fortune
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AI·Fortune IntelligenceSpending on AI data centers is so massive that it’s taken a bigger chunk of GDP growth than shopping—and it could crash the American economyBy Nick LichtenbergBy Nick LichtenbergFortune Intelligence EditorNick LichtenbergFortune Intelligence EditorNick Lichtenberg is Fortune Intelligence editor and was formerly Fortune's executive editor of global news.SEE FULL BIO Are data centers eating the economy?Getty ImagesThe mighty American consumer may have finally met their match, and it’s a giant hulking rectangular box that hosts very few people inside, but rather a huge nest of servers, storage systems, and networking equipment
Consumer spending in the American services economy is so large it can boggle the mind, representing roughly two-thirds of gross domestic duct
To paraphrase the long-running coffee chain Dunkin’, America runs on spending
But this mighty American consumer has slow seasons, and the summer of 2025 appears to be one of them
There are several interconnected factors, namely, recent jobs growth now appearing much smaller than previously thought and the impact of artificial intelligence on the workforce
But those hulking rectangular boxes, the massive data centers suting up across the country, are emerging as a giant magnet for dollars in a way that rivals consumer spending itself
Giant companies have spent so much on data centers in 2025 that their spending is now contributing more to U.S. economic growth than consumer spending, long considered the nation’s economic engine
If you make the reasonable assumption that spending on data centers equates to AI capital expenditures, defined as capital deployed for information cessing equipment and software, then the pattern is : A ton of money is flowing into one concentrated area, and the outcome of that is uncertain
Microsoft, Google, Amazon, and Meta are the main players at staggering levels to build and upgrade data centers that support the exponential demand for AI computing power, with those four companies alone forecasting a record $364 billion of capital investment in 2025
Combined, the so-called Magnificent Seven giants spent more than $100 billion on data center jects in just the past three months, as calculated by the Wall Street Journal’s Christopher Mims
All this spending has to have an impact on the economy
Analyst estimates from Renaissance Macro Re indicate that so far in 2025, the dollar value contributed to GDP growth by AI data center expenditure surpassed the total impact from all U.S. consumer spending—the first time this has ever occurred
So far this year, AI capex, which we define as information cessing equipment plus software has added more to GDP growth than consumers' spending. pic.twitter.com/D70FX2lXAW— RenMac: Renaissance Macro Re (@RenMacLLC) July 30, 2025 Or as Rusty Foster, author of the widely read media blog Today in Tabs, puts it: “Our economy might just be three AI data centers in a trench coat.” This recalls the classic comedic device of several children wearing a long jacket, pretending to be an adult, as memorably portrayed in Netflix’s BoJack Horseman, when “Vincent Adultman” successfully maintained the illusion for several dates with Princess Carolyn
But then the bubble popped, or the trench coat came off
Why is this happening now? Several forces are driving this unprecedented investment wave
The boom in generative AI and advanced large language models—nologies that require vast amounts of computing resources—has forced giants to rapidly increase their physical infrastructure
Data from McKinsey jects that between 2025 and 2030, companies worldwide will need to invest a remarkable $6.7 trillion into new data center capacity to keep up with AI demand
AI data center spending has grown at least 10-fold since 2022, with the well-known blogger Paul Kedrosky estimating that it’s nearing 2% of total U.S
GDP by itself. “Honey, AI capex is eating the economy,” he writes, arguing that AI capex is so big that it’s “affecting economic statistics, boosting the economy, and beginning to apach the railroad boom.” Apollo Global Management’s Torsten Slok, without wading into the data center capex question, has assembled re showing that the AI boom has surpassed the market value of the boom of the late ’90s, which became known as the “dotcom bubble” after speculative mania burst and a recession set in
Kedrosky makes a similar point, contrasting capex booms from throughout financial history, notably the telecom boom of 2020 related to 5G/fiber nology and the railroad boom of the 19th century as the United States embraced a transportation revolution. “Capital expenditures on AI data centers is ly around 20% of the peak spending on railroads, as a percentage of GDP, and it is still rising quickly,” Kedrosky writes. “And we’ve already passed the decades-ago peak in telecom spending during the dotcom bubble.” Noah Smith, a widely read economics Substacker, asks the obvious question: “Will data centers crash the economy?” The impact on the broader economy This surge in investment has had found down consequences
Without the AI data center building spree, GDP might have actually contracted in the face of uncertain macroeconomic conditions
So data center spending may have staved off—or postponed—a recession
Money flooding into AI infrastructure is being diverted from other sectors, including venture capital, traditional manufacturing, and even consumer-facing startups
Un historical infrastructure booms such as those for railroads or telecom, AI data centers are short-d, fast-depreciating, and require continuous hardware upgrades—suggesting this pattern of investment may remain volatile and capital-hungry for years to come
As AI redefines industries, the flow of capital into the physical backbone of this nology—vast data centers—has up old assumptions what drives America’s economy
Consumer spending, though still immense in absolute terms, is not keeping up with the extraordinary scale and speed of investment by giants determined to lead in the AI era
The trajectory suggests that the U.S. economy in 2025 is being shaped not so much by the purchasing power of its people, but by the relentless arms race for AI compute capacity—an unprecedented, -led growth engine. [This headline was d to clarify that data-center spending has taken over from consumer spending as a of GDP growth.] For this story, Fortune used generative AI to help with an initial draft
An editor verified the accuracy of the information before publishing
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