"The Coming AI Bust:
Why Trump-O-Nomics Is Riding a Time Bomb"
by David Stockman
by David Stockman
Excerpt: "It should be damn obvious that the current blistering AI bubble is setting up Wall Street, the US economy and Trump-O-Nomics for a thundering bust. The AI frenzy has now gotten so out of kilter that fully $140 billion or 76% of the $184 billion gain in real GDP during the first half of 2025 was accounted for by feverishly surging investments in AI-oriented GPUs, network gear, server farms and data centers.
Moreover, this AI investment surge, which is expected to annualize to more than $425 billion in 2025, has been on a literally explosive growth trajectory. According to Grok 3, the comparable annual AI investment spending levels for 2022, 2023 and 2024 in the US were $104 billion, $179 billion and $250 billion, respectively. That is, the projected 2025 annual rate of AI spending will be up by 4.1X from just three year ago.
Of course, when you back out this AI investment explosion from the overall US investment spending numbers, what’s left is pretty punk. To wit, non-AI investment in US equipment and intellectual property in the fourth quarter of 2024 totaled $2.586 trillion, which figure rose by only $31.9 billion as of Q2 2025. So the annualized rate of gain was just 2.4% during the 2025 first half—a level far below the 12.2% annual gain in the AI-swollen BEA figure for total US equipment and intellectual property (first line) investment.
In short, what is propping up the entire main street economy is an immense speculative surge in AI investment spending that isn’t remotely sustainable because it’s based on a fevered stock market bubble, fueled by the Fed’s printing presses. And for want of doubt, let us remind what the real GDP and its major components looked like during the first half of 2025, excluding the AI investment eruption."
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