AI Investment Shields US Growth, Says Economist David Rosenberg

Economist David Rosenberg argues that spending on artificial-intelligence projects is preventing a recession, but warns the broader economy remains weak without it.

During the latest episode of the "Excess Returns" podcast, veteran economist David Rosenberg said AI-related spending now accounts for roughly 50% of all corporate investment and is expanding at about 18% annually in real terms, offsetting declines in the "old economy". He likened the current capital shift toward data-center construction to the dot-com period’s capital shortage for residential housing, a dynamic that fuels the present housing affordability crisis.

Rosenberg noted that, aside from AI, the economy shows signs of weakness, citing a contracting housing market, soft auto sales and lagging non-tech manufacturing. He warned that without the AI boom, the United States would probably be in a recession, referencing the 1.5% annualized growth in Q2 and an unexpected loss of 23,000 jobs in July. The economist also cautioned that credit markets are likely to signal the eventual slowdown of AI-driven growth, pointing to rising financing costs and sharply widening credit-default-swap spreads. He concluded that debt investors typically detect downturns before equity markets do.