The Hidden Cost of America’s AI Boom

Record stock market highs and surging corporate profits mask a stagnant standard of living for most Americans, driven by a structural decline in net investment. While gross investment appears stable, the economy has shifted toward shorter-lived assets like software and equipment, causing depreciation to consume an increasing share of GDP. Federal budget deficits, now largely directed toward social transfer payments rather than infrastructure or productive capital, fuel consumption-driven corporate revenue. This system prioritizes short-term profit growth over the long-term capital expansion necessary to raise productivity. Even the current AI investment boom represents a reallocation of capital toward assets with rapid depreciation cycles, failing to expand the nation's overall productive base. Consequently, the economy relies on debt-funded consumption, widening the wealth gap as the country's capital stock growth remains at historically low levels.