Beau of The Fifth Column
Let's talk about the GDP minus data centers and the Trump economy....
11 Oct 2025
Chapter 1: What is the main topic discussed in this episode?
Well, howdy there, Internet people. It's Belle again. So today, we're going to talk about the GDP minus data centers and what it means for the Trump economy. Even though we aren't getting government economic reports right now, and that is certainly helping Trump attempt to tell Americans everything is okay, we're getting private data.
Chapter 2: What does GDP minus data centers reveal about the Trump economy?
And frankly, all the underlying data is bad. The GDP and the stock market are chugging along, but the fundamental economic picture isn't great. Now, we have an analysis that explains a bit about those widely used gauges. To borrow a phrase from Rusty Foster, our economy might just be three data centers in a trench coat.
So, the analysis by the Harvard economist Jason Furman does something simple. It simply removes data centers from the GDP. When that's done, everything else we've been seeing falls into place. The annualized GDP for the entire first half of the year was just one-tenth of 1%. That lines up with the fundamentals and with the stagflation worries that keep resurfacing.
But what about the stock market? That's still doing fine, right? Well, the stock market is being fueled by, you guessed it, tech stocks, specifically those connected to AI. In other words, the same companies involved in the data centers.
Furman tweeted about his findings and summed it up with, quote, investment in information processing equipment and software is 4% of GDP, but it was responsible for 92% of GDP growth in the first half of this year. GDP, excluding these categories, grew at a 0.1% annual rate in H1. H1 is the first half of the year. His findings were echoed by Robert Armstrong.
That's the guy who came up with the taco trade term about Trump. Billionaire investor Steve Eisman. You'd know him from the 2015 movie The Big Short. Well, he wasn't in the movie. The movie was about him. He's the guy who predicted the 2008 housing crash. Anyway, he described the economy as a tale of two cities. where AI is putting a happy face on stagnation.
He painted a pretty grim picture of the state of things, saying, quote, The U.S. economy is not even growing, really. 50 basis points outside of AI. All of these numbers indicate that AI build-out is powering more of the GDP growth than, well, shopping, consumer spending. That wouldn't be the case in a healthy economy. The easiest way to look at all of the economic speak here is pretty simple.
People look at the GDP and the stock market as gauges for the economy. If the GDP is growing, that means money is changing hands and the economy is growing, and that should translate into jobs. If the stock market is going up, normally that means companies are profitable and people are feeling good about the future and investing.
Now we find out the gauges are being influenced by a single sector of the economy to an unprecedented degree.
AI build-out making up that much GDP growth means money isn't changing hands across the economy the way we would normally imagine.
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