AI & The U.S. Economy — Mid-September 2025: Key Developments
1. A “Massive Ten-Year” AI Boom Just Beginning
AMD CEO Lisa Su, speaking at the Axios AI+ Summit in Washington, D.C., argued that the U.S. and world are only in year two of a projected ten-year cycle of AI innovation and infrastructure build-out. Key growth drivers will include AI models, chip development, and data center expansion. She estimated the AI accelerator market alone could be worth $500 billion in the next three to four years. Axios
2. U.S.–U.K. $42B Tech Pact: Boosting AI & Digital Infrastructure
During President Trump’s state visit to the UK, a “Tech Prosperity Deal” worth about £31 billion (~$42 billion) was signed. It strengthens collaboration on AI, quantum computing, and civil nuclear energy. Microsoft, Google, Nvidia, etc., committed heavily: Microsoft will invest significantly in cloud and AI infrastructure; Nvidia plans to deploy 120,000 GPUs in the UK. Reuters
3. AI Infrastructure Spending & UK Investment
Aligned with the U.S.–UK pact: U.S. tech giants pledged billions toward AI infrastructure in the UK. Efforts include creating new AI supercomputers, scaling cloud infrastructure, and expanding DeepMind/Google’s work. The goal: to make the UK a global leader for AI R&D and deployment zones. Challenges like high energy costs, regulatory/permit bottlenecks are noted. Financial Times+1
4. AI’s Impact Not Fully Captured in GDP Figures
A Goldman Sachs report highlights a “blind spot” in how U.S. GDP accounts for AI growth. Since 2022, AI infrastructure revenues have grown by ~$400 billion, but GDP statistics only allocate around $45 billion to AI-driven growth. Goldman estimates the true figure is closer to $160 billion, meaning about $115 billion of economic output is underrecognized, partly because AI-related semiconductors are treated as intermediate goods. Business Insider
5. Entry-Level Jobs Being Displaced? Fed Chair Raises Concern
Federal Reserve Chair Jerome Powell acknowledged that AI may be hurting entry-level jobs, especially those held by recent college grads. He noted firms might be substituting lower-skill early-career roles with AI automation. While he said AI is not the only factor in labor-market shifts, the warnings echo concerns raised by other industry leaders. Business Insider
6. FTC Probes AI Chatbots for Consumer Risks
The U.S. Federal Trade Commission has launched an inquiry into how consumer-facing companies develop, test, and monitor AI chatbots. Names mentioned include big players like Alphabet, Meta, and OpenAI. The focus: ensuring safety, transparency, and managing negative externalities from AI tools in everyday consumer use. Reuters
7. UK’s Growing AI Hub & U.S. Companies’ Role
The UK is becoming increasingly attractive for AI investments. London, in particular, is seen as Europe’s top location for data centers due to demand, policy stability, regulatory conditions, and skilled labor. U.S. firms are responding: Nvidia, Microsoft, and others investing in AI “growth zones” in the UK. Financial Times+1
8. Inflation, Markets, and AI Sentiment Boost
U.S. stock markets have been hitting new highs amid cooling wholesale inflation. Oracle gave a bullish forecast driven by AI/cloud revenue. Investors appear hopeful that interest rates might be cut by the Fed soon without triggering a recession. AI-enthusiasm contributes to optimism in tech sectors. AP News
9. Chinese Ban on Buying Some Nvidia AI Chips
China has ordered major tech firms (e.g. Alibaba, ByteDance) to stop procurement of certain Nvidia AI chips (like RTX Pro 6000D). The move is part of Beijing’s broader strategy to reduce dependence on U.S. tech and boost domestic semiconductor development. Financial Times
10. Census Bureau: AI/Tech Adoption Doesn’t Necessarily Change Workforce Size or Skills (yet)
According to the U.S. Census Bureau’s 2023 Annual Business Survey, though many businesses are adopting robotics or AI, this has so far had little measurable impact on the number of workers or their skill sets. In other words, while AI adoption is rising fast, its effects on employment composition are not yet strongly reflected in the data. Census.gov
Implications & Reflections
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Invisible impact: A lot of AI’s economic boost isn’t showing up in official statistics. If methods of measurement lag, policy response may also lag.
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Workers at risk vs. new roles: Entry-level roles seem most vulnerable; but there’s also potential for creation of new jobs in AI infrastructure, maintenance, etc. The labor shift could widen inequality if not managed.
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Infrastructure & geopolitics intertwine: AI isn’t just tech; it's tied to national competitiveness, trade policy, and investment incentives. Deals like U.S.–UK and Chinese countermeasures show geopolitics are deeply embedded.
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Regulation is catching up: From FTC inquiries to concerns at the Fed, oversight is increasing. But balancing innovation with protection (consumer, labor, etc.) remains a challenge.
