AI Economy Booms

The US AI economy is growing at an unprecedented rate of 2,000% per year, but this growth is largely invisible in conventional GDP statistics due to factors like declining per-unit prices and the impact of AI on labor. Economists are struggling to measure the AI economy, which could lead to surprises that are hard to recover from. The AI sector is estimated to reach $250 billion in 2025, with growth driven by advancements in compute spending, raw compute capacity, and quality-adjusted AI output. Why it matters: Accurately measuring the AI economy is crucial to understanding its potential impact on labor and the broader economy, and could help policymakers prepare for the significant changes that AI may bring.