How AI is Affecting the Economy

Artificial intelligence (AI) is fueling U.S. economic growth and market valuations while introducing risks tied to valuations, labor disruption, and energy demand.

AI-related investment in software, semiconductor chips, data centers, power infrastructure, and networking has already added hundreds of billions of dollars to U.S. GDP since late 2022, with one estimate pegging the contribution at roughly $250 billion. Economists expect AI to boost productivity, though unevenly across industries as companies integrate it into manufacturing, production, and services.

So far, AI appears to be a minor factor in the 2025 labor-market slowdown, but economists anticipate broader adoption could displace some jobs even as it creates new roles and demand elsewhere. Policymakers and researchers note that the near-term macro risk is not mass unemployment but retraining needs, regional dislocation, and pressure on lower-skilled occupations.

AI has been a dominant equity theme, propelling S&P 500 gains in 2025, with returns concentrated in AI-linked megacap tech, data-center, chip, and cloud firms. Regulators and analysts are weighing whether AI-driven optimism is fueling excessive leverage or speculative behavior in equity and credit markets, which could magnify any downturn. At the same time, diversified AI adoption across sectors is viewed as a potential buffer against shocks, making the U.S. economy more resilient if productivity gains materialize as expected.

(Sources: RPS, Current Population Survey, Bureau of Labor Statistics, St. Louis Fed)

- Tony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management