AI Is Holding Up the U.S. Economy — What If It Crashes?

Can the AI boom save a weak economy? According to the times, the 2025 US economy is running on essentially two track. Everything tied to artificial intelligence is booming. Almost everything else is struggling. In Nevada, North Dakota and Washington, D.C. region, weak tourism, low oil prices and federal job cuts are being cushioned by a flood of AI data center construction. One economist calls it a two track economy where an AI gold rush papers over drift everywhere else. Huge spending on chips, software and data centers now account for more than 90% of recent GDP growth. Companies like Caterpillar, Johnson Controls and Eaton are cashing in on the infrastructure buildout. But the party is heavily concentrated among tech giants and and high income households whose stock portfolios are riding the AI wave. As one bank of America economist warns, if those AI stocks stumble, the hit to wealthy consumers could be really quite painful for the economy. Okay, so what's the real message here? Yeah, so far we're all propped up by this AI economy. But if Nvidia has even a sneeze, it could be severe pneumonia for the rest of us. Our entire economy could crumble, crash quickly. That's scary. We don't want to be in a position where we're all sitting on the edge of our seats waiting every quarter for the latest earnings report from Nvidia. Only one bad report and there has to be a bad report at some point and things come tumbling down. The music. Let's go a little bit deeper here. Look, I'm a big fan of AI. I like AI. I invest in AI and I'm not talking up my book and I'm giving you no financial investment advice on this show. But I invest mostly in mutual funds, low cost index funds in information technology. So it's not because I'm brilliant or anything. I just happen to think, okay, that's where the growth is. That's what I'm excited about. And it's done really well, almost too well the last decade. It's a little bit scary. And I was one of those people earlier this week sitting on the edge of my seat. Is Nvidia going to disappoint people? Am I going to see the market go down 10%? Because we do live in a world now where the top 10 tech companies account for 40% of the entire S&P 500 market cap, some 20% of the entire worldwide economy. And it's getting a little scary. The concentration is so intense. If you look at just the top seven companies, they make up a third of the S&P 500. And sure, wealthy stockholders are doing well, but they're essentially driving the entire economy. If you look at the spending habits right now in the United States, people Forget the bottom 10% or 20%. They're just scraping by as they always do. But the bottom 90% now are really not spending much money. The spending is coming from people in the top 10%. But here's the problem. If there's even a slight turn down in the economy with any of these high tech stocks and the top 10% get a little nervous, it's very easy for them to just not spend any money this month. That's when things get cascade out of control. And a bust in AI stocks could just quickly decimate restaurants and service workers very quickly and in a hard way. So it's something to be concerned about. A lot of rural areas are doing well with these build out of data centers. The problem is once you've built these giant centers that are larger than shopping malls, they don't need any workers. So it's bye bye jobs. It's nice for that eight, 16 months where there's construction going on and lots of activity. A lot of relatively high paid construction jobs, engineering jobs, technical trades get employed. But these data centers run on their own. They don't even need anyone to come in in the morning and flip the lights up. They're run by computer, by robots quite often that have sensors. They don't even need the lights on. They don't need Windows. So I'm not the only one. More and more analysts are concerned about this. I am not, to be clear, predicting we're going into a recession. Easiest way to get headlines is to say major recession coming, sell everything. And people who do that often get attention. But they're typically wrong 19 out of 20 times. Sure, 1 out of 20 times they're right because a broken clock and all of that. So I would be very skeptical of anyone telling you they know when the good times end. Because let me be clear, these are not good times for about 90% of Americans in terms of their own net worth growing, in terms of their wealth growing. It's very, very concentrated on those of us who have been fortunate, maybe had some lucky breaks come our way. A lot of my success is because of luck. I happen to get into online training really early. And it took off. It wasn't because I was a genius, but it took off. And then I did invest in all of these tech companies, but not everyone is that lucky. So what is going to happen to our economy? Certainly the rash of tariff taxes does not seem to be Helping the average person, it's just a tax increase because let's face it, there are very few things that are manufactured 100% in any country, much less the United States. You look at something like a so called American car company and you can trace pieces here and there and design and market finance to dozens and dozens and dozens of countries all over the world. We live in an interconnected world, like it or not. Yes, there's been a recent attempt to retrench and get away from that. It has not crashed the economy as many economists suggested. But is that because we've just gotten lucky with this, this AI spending and hype? And when I say hype it's not because I don't think AI is real. I've. I spent a tremendous amount of my time investing not only money but time in trying to capture value from artificial intelligence. And excuse me for sounding self promotional too much in the show, I do have ads promoted, but I do have my own AI clone, tjwalker AI where it can coach you on public speaking and media training and life coaching. And I invested a bunch of time and energy and money into it. Now going on almost two years, have I gotten any big payoff? No. Could I cut back? I don't spend a lot of money every month, but I do lose money on it every month. At some point can I cut back? Yeah, if it continues to lose money. The big concern among many market analysts is that the Procter and Gambles of the world, the non tech companies that are spending so much of their budget buying chips from the Nvidias of the world, buying AI services, say you know what, long term this may be great, but doesn't seem like it's happening as quickly as we want it. Why don't we just break some? That slowdown could really multiply throughout the economy. Could drastically reduce earnings for companies like Nvidia and other high tech companies. That could cause massive sell offs for the rest of the stock market that could panic people and crimp spending and then we really could be in a recession. So again I'm just laying out to you the scenario. I'm not making a prediction that it's going to happen today, tomorrow or next week. And let's not forget a lot of people predicted the dot com sell off, the dot com bubble bursting. But let's not forget so many of them started predicting it in 1997. Didn't happen until 2000, 2001. So if you listen to all the naysayers, you lose a lot of upside and you remove yourself from what's really going on and you unnecessarily panic. So I not telling you I know exactly when this bubble burst, if in fact it even is a bubble, can pretty confidently predict that they're going to be a handful or fewer big winners in this AI technology space, and that a lot of companies are not going to win and their investors are going to lose everything. And that is going to cause some pain. In the same way, not everyone was Amazon.com, in the Internet bubble. Amazon did really well. Investors in Amazon did really well. But if you invested in pets.com or space.com seemingly 10 trillion other.com, you lost every single penny. I know I I was on the losing side on a lot of those.com bets.