Data Centre Spending Fuels US GDP Growth Amid AI Bubble Concerns

In the first half of 2025, investment in data centres and information processing technology largely propelled US GDP growth, highlighting the significant role of high-tech infrastructure in the economy. Harvard economist Jason Furman noted that without this expenditure, GDP growth would have stagnated at just 0.1%.

The implications of this trend are noteworthy. According to an analysis by Renaissance Macro Research, spending on AI data centres alone has outpaced US consumer spending, raising questions about the sustainability of such investments. This surge in spending primarily comes from technology companies eager to embed artificial intelligence (AI) into every aspect of daily life.

Rethinking AI’s Role in Economic Growth

Initially, the promise of AI encompassed noble goals, such as addressing climate change and enhancing healthcare. However, the current focus appears to have shifted towards more trivial applications, including generating essays, resumes, and even fake media. This pivot raises concerns about the genuine benefits of AI and its integration into existing processes.

The rapid expansion of AI integration seems driven by the fear among tech companies of potential financial repercussions if their investments do not yield widespread adoption. The Bank of England and the International Monetary Fund have recently warned about the dangers associated with an AI bubble. The Bank of England specifically highlighted stretched equity market valuations for technology firms, suggesting that a market correction could be imminent if optimism surrounding AI diminishes.

The term “AI slop” has emerged to describe the perceived over-promise and under-delivery in the tech industry. Critics argue that in the race to implement AI, companies and supportive governments are neglecting critical issues, such as copyright infringement and privacy rights. Additionally, the environmental impact of constructing resource-intensive data centres raises further questions about the balance between technological advancement and sustainability.

Environmental and Ethical Implications

The construction of numerous data centres, essential for supporting AI infrastructure, poses a significant challenge to global sustainability efforts. As the world aims for net-zero emissions, the energy demands of these facilities are concerning. With energy resources becoming increasingly scarce, the prioritization of data centres over essential human needs may reflect troubling trends in resource allocation.

Despite these challenges, there is a glimmer of irony in the situation—consumers may find solace in AI-created entertainment, such as theme songs and videos, even as the sector grapples with serious implications for society and the environment.

The trajectory of AI and its integration into the economy remains a topic of intense scrutiny. As spending on data centres continues to dominate GDP growth, the broader implications for technology’s role in our daily lives warrant a careful examination of both the benefits and the potential pitfalls.