Global Weekly Economic Update: Insights from Deloitte on Gen AI and US Economic Trends
Deloitte Insights, through its Global Economics Research Center, continues to provide comprehensive analysis on the evolving economic landscape worldwide. For the week of August 11, 2025, Deloitte’s Chief Global Economist, Dr. Ira Kalish, shares key perspectives on how generative artificial intelligence (gen AI) is influencing the US economy, alongside other significant economic factors such as government debt, inflationary trends, and tariff uncertainties.
Generative AI Driving US Economic Growth
Investment in generative AI is already making a substantial impact on economic activity in the United States. In the first half of 2025, real (inflation-adjusted) investment in information technology equipment, heavily linked to gen AI infrastructure development, contributed to 59% of real GDP growth. This indicates that gen AI is a major driver behind the economic momentum currently observed.
Interestingly, this surge in information technology investment contrasts with a sharp decline in real nonresidential investment in physical structures such as factories, warehouses, office buildings, and shopping centers. Deloitte analysts suggest that while typical investments in these traditional structures have shrunk, the data warehouse investments crucial to supporting gen AI likely grew substantially within this category. These shifts underline a reallocation of capital towards technologies underpinning digital transformation amid continued tariff-related business uncertainties that delay broader facility investment decisions.
The expansive investment in gen AI also correlates with elevated equity valuations. For instance, the "Magnificent Seven" tech giants accounted for about half of the increase in the S&P 500 index in 2024, underscoring investor enthusiasm around technology-driven growth prospects. Deloitte experts warn, however, of parallels to the 1990s “dotcom bubble,” where overvaluation eventually led to market corrections and a mild recession. They caution that tariffs and immigration policies pose risks that may slow the economy, potentially triggering declines in nontech equity prices and even tech stocks if market adjustments occur.
Balancing Energy Consumption and Rising Costs
Deloitte Insights highlights another critical dimension of gen AI’s economic impact: its energy demands. The International Energy Agency (IEA) forecasts that data centers’ power consumption in the US will account for nearly half of electricity demand growth through 2030, driven largely by AI workloads. Globally, electricity consumption from data centers is expected to more than double over the next five years, equating by 2030 to the current electricity usage of Japan.
This rising demand coincides with a transition toward renewable energy investments, which form about half of the planned electricity capacity increases in the US. However, with subsidies for renewables reduced, these new energy sources are anticipated to come at higher costs. Deloitte’s Research Center for Energy & Industrials projects that these factors will significantly increase household electricity expenses, potentially dampening consumer demand in the broader economy.
Prospects and Challenges for Productivity and Labor Markets
While gen AI investment boosts current economic growth and market valuations, its long-term impact on productivity remains uncertain. The history of technological innovation suggests a lag between a technology’s introduction and its tangible productivity benefits. It takes time for businesses to integrate new tools fully, optimize their use, and realize efficiency gains.
Theoretically, gen AI can revolutionize labor productivity, catalyzing faster economic growth and raising living standards. Yet, this transformation also promises disruption to labor markets. Some jobs may become obsolete, even as new roles emerge requiring different skills, creating a challenging transition for workers.
Government Debt and Fiscal Outlook
Aside from economic growth patterns, Deloitte Insights draws attention to the US government’s fiscal outlook. Following the enactment of the "One Big Beautiful Bill" earlier this year, the nonpartisan Congressional Budget Office (CBO) released several debt and deficit projections. The baseline forecast assumes consistent trends in economic growth and factors in technological progress.
Under these assumptions, deficits remain high, and debt levels continue to increase significantly. The CBO outlined alternative scenarios hinging on total factor productivity (TFP), a measure of output gains beyond labor and capital inputs reflecting technological progress such as gen AI adoption. The ultimate fiscal trajectory depends substantially on how rapidly and broadly economies improve productivity through innovations like generative AI.
About Deloitte Insights
Deloitte Insights delivers proprietary research aimed at equipping organizations to translate aspirations into practical strategies. With its global research centers covering diverse industries and topics—from economics and workforce trends to technology and sustainability—Deloitte empowers decision-makers with timely, fact-based insights. Their content is enriched by expert commentary, data visualizations, and live webcast series to ensure business leaders stay well-informed in a rapidly changing, interconnected world.
For further updates and comprehensive analyses on global economic developments, visit Deloitte Insights at www.deloitte.com/insights.
Contact Information
For inquiries and deeper insights into the report, you may reach Dr. Ira Kalish, Chief Global Economist at Deloitte Touche Tohmatsu Ltd., at [email protected].
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