AI ARITHMETIC

While the AI investment boom has been a key pillar upholding the US economy in the face of numerous headwinds, roughly 90% of high-tech equipment is imported. In 26Q1, AI hardware spending and capex on software, data center construction, and utilities collectively added 1.2 percentage points to GDP, but imports critically subtracted 0.5PP, for a net contribution of 0.7PP. Large, but hardly mesmerizingly gigantic.