The International Monetary Fund (IMF) now attributes part of the United States’ economic resilience in 2025 to a surge in artificial intelligence (AI) investment. Despite growing headwinds and prior concerns over a downturn, AI spending has helped support growth, boost markets, and prevent a steeper slowdown.
The IMF upgraded its U.S. growth forecast to 2.0 % for 2025 and 2.1 % for 2026, acknowledging that AI has played a key role in cushioning demand and equity markets.
How AI is Propping Up the Economy
1. Cushioning Demand & Financial Conditions
The IMF notes that AI investment is easing financial conditions and supporting equity valuations, which in turn bolster consumption and business confidence.
2. Wealth Effects & Stock Gains
Rallying tech stocks (particularly in AI-related sectors) are generating wealth gains that feed back into consumer spending.
3. Rising Risks: Inflation & Bubble Concerns
However, the IMF cautions that AI-driven demand may stoke inflation without matching productivity gains.
Its chief economist, Pierre-Olivier Gourinchas, likened the AI boom to the dot-com bubble, warning of the potential for a sharp price correction—even if not a systemic collapse—since much of the investment is cash-financed rather than debt-financed.
Growth Outlook & Broader Impact
- The IMF lifted global growth forecasts, now expecting 3.2 % in 2025 and 3.1 % in 2026.
- The U.S. remains the top-performing G7 economy under this revised outlook.
- Still, the report warns that persistent inflation, market corrections, and trade tensions—especially from U.S. tariffs—are key risks going forward.
Implications & What to Watch
- Policy balancing act: If AI is stimulating demand without productivity, central banks face the challenge of tightening too much or too late.
- Vulnerability to corrections: Elevated valuations in concentrated tech sectors could make markets fragile.
- Longer-term productivity gap: To justify the hype, AI must deliver gains in output, automation, and efficiency—not just elevated valuations.
