Personal Consumption Fuels GDP Growth, Not AI, Says Report

A recent report from MRB Partners reveals that personal consumption, rather than artificial intelligence (AI), was the largest contributor to GDP growth in 2025. This finding challenges the prevailing notion that the economic growth in the United States heavily relied on the burgeoning AI sector.

The report, authored by economic strategist Prajakta Bhide, indicates that robust consumer spending has been the backbone of the economy. Despite significant investments in AI infrastructure, Bhide emphasizes that much of the technology and high-tech equipment driving that growth is imported, which does not positively affect GDP calculations.

Consumer Spending Dominates Economic Landscape

Bhide’s analysis highlights that while AI contributed to GDP growth, its impact was primarily due to software investments. The report notes that the contribution from data centers was “negligible.” Bhide explained in an interview with Business Insider that “aggregate income growth is lower than it used to be, and so is job growth, which affected consumer sentiments.” Despite these challenges, consumers have continued to spend, creating a significant pillar for economic stability.

The key components that contribute to GDP include personal consumption, private domestic investment, government spending, and net exports. Bhide’s report underscores the importance of consumer behavior, stating, “Consumers continue to be the backbone of the economy.” The sentiments expressed by consumers often diverge from their actual spending behavior, a phenomenon that can complicate predictions about future economic trends.

AI Bubble Concerns and Broader Implications

While the report acknowledges the potential risks associated with an AI bubble, it argues that fears of a significant downturn in GDP due to a decline in AI-related growth may be overstated. Bhide notes that “a negative shock to the optimism around AI implies a risk to GDP growth,” but after adjusting for imports, the overall impact of AI growth appears more modest than commonly believed.

Concerns regarding the AI bubble extend beyond GDP figures. The stock market and retirement funds are increasingly tied to the fortunes of leading companies in the AI sector. The eight most valuable public companies in the United States, including Nvidia, Alphabet, and Apple, have invested heavily in AI technologies, collectively valued at approximately $22 trillion.

Historically, significant pullbacks in consumer spending have not typically triggered economic downturns. Instead, spending often diminishes in response to rising job losses and during periods of recession. As the economy navigates the complexities of consumer sentiment and technological advancements, the findings from MRB Partners serve as a reminder of the fundamental role that personal consumption plays in economic health.

This report invites a reevaluation of how economic growth is understood in the context of emerging technologies, particularly AI, and reinforces the enduring influence of consumer behavior on the overall economic landscape.