New estimates from Soto, Thieu and Allen:
GDP growth in Q1 was 1.6% q/q AR, while netting out imports, the contribution from AI related investment was estimated at 0.63 ppts. The other components of GDP accounted for 0.97 ppts. Hence, considering imports, spending on AI capex accounts for considerable growth. Obviously, this is a mechanical decomposition, not accounting for efficiency effects in other sectors, nor wealth affects emanating from equity prices, etc.
“Obviously, this is a mechanical decomposition, not accounting for efficiency effects in other sectors, nor wealth affects emanating from equity prices, etc.”
Included in “etc.” are the budgetary costs to users of AI, the competition with other sectors for credit, chips, electricity, electricians and so forth. “Dutch disease” kinda stuff, consistent with the slowing of growth outside of AI.
Off topic – Signs of escalation:
https://www.yahoo.com/news/politics/articles/us-sending-more-refueling-planes-185601995.html
The U.S. is reportedly sending dozens more refueling aircraft to the Middle East. I don’t know anything beyond what’s in the article, but “dozens” is a big proportional increase relative to the 60 already there.
Aside from humanitarian concerns, the near-term issue of greatest concern is Iran’s response to U.S. escalation. Iran’s planners already know that oil prices are a potent weapon. So far, Iran has not tried to run up the score on U.S. deaths or ships. This could get worse for both sides and bystanders, too.
One more thing – Iran’s big population center is far from the Strait of Hormuz and far from most bases being used by U.S. bombers. We aren’t sending tankers to diminish Iran’s control over the Gulf. Tankers are part of the siege.