The U.S. economy appears to be gaining momentum, with headlines touting rising GDP and a booming tech sector. But for many Americans, especially outside the major tech corridors, the reality feels very different. Rising costs, stagnant wages, and limited job growth have left many wondering: if the economy is booming, why does it still feel like a struggle?

Recent economic data offers a partial explanation. In the first half of 2025, U.S. gross domestic product (GDP) showed a mixed picture. After contracting by 0.6% in the first quarter, the economy rebounded in the second quarter with 3.8% annualized growthโ€”the fastest pace in nearly two years. Averaged together, the GDP grew about 1.6% annualized for the first half of the year. At first glance, thatโ€™s a positive trajectory.

 

 

But digging deeper reveals that nearly all of this growth came from a single, narrow slice of the economy: investment in information-processing equipment and software, which includes the infrastructure behind artificial intelligence (AI)โ€”data centers, chips, servers, and related software. According to economist Jason Furman, this category made up just 4% of the economy yet contributed 92% of the total GDP growth during this period. Without it, the rest of the economy was nearly flat, growing at just 0.1% annualized.

 

This lopsided growth underscores a growing divide between the headline figures and the broader economic experience. The surge in AI investment, largely driven by tech giants like Microsoft, Google, and Amazon, has created what some call a tech-fueled mirage of prosperity. While these companies race to build AI infrastructure, including massive data centers, most other sectorsโ€”manufacturing, real estate, retail, and servicesโ€”have seen little to no momentum.

The effects are uneven. Rising electricity demand from data centers has pushed retail power prices up by 6.7% year-over-year to 18.2 cents per kilowatt-hour in the first half of 2025. In Texas, data centers account for nearly 60% of new electricity demand. And while these facilities contribute to GDP through capital investment, they often require fewer workers than traditional industries, meaning job creation has not kept pace.

This has led to concerns among economists that the U.S. is effectively running on two economies: a high-growth tech sector and a stagnating remainder. Justin Wolfers, a professor at the University of Michigan, warned that the nation could be on the brink of a โ€œnon-AI recession.โ€ If the tech buildout slowsโ€”due to overcapacity, rising costs, or a drop in investor enthusiasmโ€”the rest of the economy may not be strong enough to sustain growth on its own.

Meanwhile, consumers are still dealing with inflation pressures, especially in essentials like housing, food, and utilities. And despite record-high investments in AI and digital infrastructure, wage growth has not significantly improved for many American workers.

 

 

The policy implications are significant. The Federal Reserve must balance inflation control with the risk of stalling broader economic growth. Lawmakers may need to consider targeted investments or incentives to revitalize sectors that have been left behind by the tech surge. Some experts are calling for a renewed focus on infrastructure, manufacturing, and workforce development to reduce the economyโ€™s overreliance on a single sector.

As the digital economy continues to grow, the benefits may eventually reach more Americansโ€”but that wonโ€™t happen overnight. For now, the disconnect between economic headlines and household budgets remains real, and the illusion of a broadly booming economy could prove fragile if tech-led momentum begins to fade.

In an era where a few data centers can move national GDP figures, itโ€™s clear that growth alone isnโ€™t the whole story. The challenge now is ensuring that the next chapter of economic expansion is one that includes more people, more places, and more paths to prosperity.

 

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