Musk bets AI will double US economic growth next year

Investing.com — Elon Musk is betting artificial intelligence will dramatically accelerate the US economy, arguing that AI could roughly double economic growth next year from around 2% to 4%.

“My guess is that AI roughly doubles US GDP growth next year from ~2% to ~4%. Maybe even more,” Musk wrote on X.

The forecast comes as investors debate whether the enormous spending on AI infrastructure will translate into broad productivity gains — and how quickly.

The scale of the investment boom is substantial. Apollo Global Management’s Torsten Slok estimates US AI-related capital expenditure could reach about 3% of GDP annually from 2027 through 2029, up from roughly 0.6% three years earlier, according to Reuters Breakingviews.

US technology companies are also on course to spend nearly $1 trillion on chips and data centers in 2027, according to Moody’s analysts cited by Reuters, compared with about $165 billion expected from Chinese rivals.

That spending will directly add to economic activity, but the bigger question is whether it can generate the productivity gains needed to sustain 4% growth.

Historical technology booms suggest there can be a significant lag between investment and economy-wide productivity improvements. The internet buildout of the 1990s, for example, took years to translate into broad gains in productivity.

AI could move faster. Companies are already deploying generative AI and increasingly autonomous agents in software development, research, customer service and other areas. If those tools rapidly increase output per worker, the economic payoff could arrive much sooner than during previous technology cycles.

But mainstream forecasts remain considerably less bullish.

Morningstar expects US growth to slow through 2027 rather than accelerate toward Musk’s 4% target. Higher interest rates could also complicate the outlook. The Federal Reserve raised its benchmark rate to 4.00% on September 16, while Goldman Sachs expects another increase in October.

Higher rates are unlikely to stop the biggest technology companies from spending heavily on AI infrastructure, but they could make it more difficult for smaller companies and businesses across the economy to finance AI adoption.

The US consumer, meanwhile, remains a source of strength. Retail sales rose 1.2% in August from July, beating expectations for a 0.8% increase, while core retail sales climbed 1.4% versus a 0.6% forecast, according to Reuters.

Musk’s forecast also carries an obvious financial connection. His companies, Tesla and xAI, have substantial interests in the continued expansion of AI, although his post did not disclose those interests, Reuters noted.

The debate will become easier to assess as companies report their AI spending and productivity data accumulates. If massive infrastructure spending begins producing measurable gains across the broader economy, Musk’s 4% forecast could look less extraordinary.

For now, however, the gap between Musk’s vision and mainstream economic forecasts remains wide.

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