{"id":658724,"date":"2026-06-26T04:36:16","date_gmt":"2026-06-26T04:36:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/658724\/"},"modified":"2026-06-26T04:36:16","modified_gmt":"2026-06-26T04:36:16","slug":"the-ai-boom-is-masking-the-damage-of-trumps-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/658724\/","title":{"rendered":"The AI boom is masking the damage of Trump\u2019s economy"},"content":{"rendered":"

President Donald Trump\u2019s social media feeds are a pig trough of artificial intelligence slop, packed with low-effort images<\/a> churned out by content farmers wielding generative AI.<\/p>\n

On any given day, he posts or reposts AI-generated versions of himself endowed withthe sculpted biceps of the Rock<\/a>, the steely gaze of an assassin<\/a> or the swagger of a madman with his finger on the nuclear button (<\/a>and everyone remembers the time he played Jesus)<\/a>. It\u2019s as if AI arrived just in time to serve as ringmaster for the political circus Americans voted for in 2024.<\/p>\n

But Trump isn\u2019t just the first president to embrace AI as a communications tool. He\u2019s also benefiting from it in a far more consequential way \u2014 whether he realizes it or not. AI companies are helping prop up much of the economy during his second term.<\/p>\n

The scramble to cash in on Silicon Valley\u2019s latest gold rush is keeping economic growth alive and masking the damage from Trump\u2019s own policies, including his relentless tariffs on imports and the energy shock triggered by his confrontation with Iran. Trump\u2019s approval ratings<\/a> are underwater. Without the AI boom, they might be in the Mariana Trench.<\/p>\n

Gross domestic product grew at an annualized rate of 1.6% in the first quarter of this year, but nearly all of that growth came from investment in AI, data centers and related technologies. Consumer spending, the traditional engine of the U.S. economy, remained well below its historical average. Business investment outside the AI sector actually contracted,\u00a0falling about 0.3% during the quarter<\/a>.<\/p>\n

\u201cOutside of AI, there is zero vitality in the US economy,\u201d economist David Rosenberg of Rosenberg Research wrote in a recent analysis<\/a>. \u201cThe AI euphoria is masking a narrowing market and a weakening economy.\u201d<\/p>\n

AI is also helping drive the stock market, which has gained roughly 22% over the past year. That matters because rising asset prices increasingly support consumer spending among wealthier households. Stocks tumbled after Trump launched the Iran war on Feb. 28, forcing investors to reckon with the prospect of a sudden energy shock. But the sell-off lasted only two months. Technology companies tied to the AI boom soon reported blockbuster earnings that crushed expectations, reigniting the rally. Investors jumped back in. Not even a war was enough to interrupt the AI buying frenzy.<\/p>\n

To measure the market\u2019s dependence on AI, Goldman Sachs created an index<\/a> in February that removes AI-related companies from the S&P 500. The results are striking. Since Feb. 20, the AI-free index has gained just\u00a01.4%, compared with a\u00a07.3%\u00a0rise for the broader S&P 500 and\u00a0a 12.3% jump for the tech-heavy Nasdaq. Strip out the companies powering the AI boom, and much of the market\u2019s momentum disappears.<\/p>\n

Stocks are not the same as the real economy, but they matter politically for Trump because they are one of the few indicators working in his favor. The last couple of monthly jobs reports have been solid, but the broader picture is less encouraging. The economy has experienced five months of job losses over the past year, and job growth remains much slower than it was for most of the Biden presidency.<\/p>\n

Inflation has climbed to 4.2 percent, while real income growth has turned negative. In other words, prices are rising faster than wages, leaving the typical worker worse off. University of Michigan consumer sentiment surveys consistently show a sharp divide between investors and noninvestors: Households with significant stock holdings remain relatively optimistic, while those without stocks are far more pessimistic about the economy.<\/p>\n

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\n\t\t\t\t\t\tRick Newman<\/a>\t\t<\/p>\n

\n\t\t\t\t\t\tRick Newman is founder of The Pinpoint Press, a newsletter on money and politics, and author of four books.\t\t<\/p>\n

\"MS<\/p>\n

\u00a9\u00a02026 Versant Media, LLC<\/p>\n

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