AI Will Save the U.S. Economy

My article in American Greatness.

Originally published here: https://amgreatness.com/2026/07/31/ai-will-save-the-u-s-economy/

The United States is in the early innings of an AI-powered economic boom, but if we embrace the degrowth doomers and stop building, the boom stops with us, and Beijing is more than happy to take our place.

Here’s the state of play in 2026:

AI-adjacent companies accounted for more than 80 percent of the S&P 500’s gains this year, leaving the index with virtually zero gains without them. Over the course of President Trump’s second term, the trend becomes even clearer. From May 2024 to June 2026, the S&P 500 gained 142 percent.

Now, if we remove the AI stocks from the equation, that number collapses to just 16 percent, which is just about on par with the pace of inflation, or even lower, depending on who you ask. AI-linked companies now make up almost half of the entire index. And that’s not because the market is driven by pure hype and a lack of fundamentals. The AI sector is producing at an unprecedented pace of innovation, and markets are rewarding companies participating in that reality.

Chip companies, data center hosts and builders, energy providers, and software corporations are among the dominant categories turning AI into real products and services. They are the ones putting the American economy and Americans’ retirement accounts on their backs. At the same time, the non-AI-associated economy is struggling, through a combination of inflation, rapidly increasing debt, an insecure housing market, among other factors

America’s AI engine is giving us the potential to elevate human flourishing to new heights. Without it, we could very well be staring down the potential of a long, crippling downturn.

The pace of innovation is unlike anything we’ve ever seen, and it’s worth digging into the numbers to make that clear.

The five biggest American tech companies alone plan to spend over $600 billion on infrastructure by the end of 2026. That is more than the annual GDP of the vast majority of countries, deployed in a single year, by a handful of American companies. While AI doomers and populist degrowthers want to merely chalk it up as some kind of giant scam, the exact opposite is true. This is the result of market demand, and additionally, real, exponential consumer demand. Despite wavering public opinion on AI, take a look at your app store, and you’ll see that the public wants to use these tools, and it finds them greatly useful to their personal and professional endeavors.

According to a McKinsey study, companies using AI are slashing logistics costs by 5 to 20 percent, inventory by 20 to 30 percent, and procurement spending by 5 to 15 percent. Additionally, a June 2026 AI Adoption Study surveyed supply chain leaders across North America and Europe and found that supplementing with AI-driven decisions represents roughly a $55 million opportunity for a $1 billion company. Thanks to AI, it will cost increasingly less to make things and to move things. This matters greatly in an era when families are battling inflation and a mixed bag of policy coming from D.C. Cheaper logistics means cheaper groceries, cheaper shipping, and cheaper everything, really.

Health care and medicine applications in AI are just starting to take off, and they’re already showing great promise. There are now more than 170 AI-discovered drug programs in human clinical trials, with 15 to 20 expected to enter final-stage trials this year alone. Moreover, AI-discovered drugs are currently passing Phase I safety trials at twice the rate of traditionally discovered processes. Health care costs have been a major political and policy issue in the post-Obamacare era, and tragically, these struggles have been making life incredibly difficult for many American families. AI has the technological capacity to reduce the harm of bad economic policy that limits choice and stifles innovation.

On the “solopreneur” front, AI is making it possible for individual Americans to have virtually unlimited productivity and efficiency tools at their disposal.

In May 2026, American “solopreneurs” filed around half a million new business applications. There are now almost 30 million nonemployer businesses in America generating trillions in business. A study conducted by Stripe found that AI is chiefly responsible for the solopreneurboom.

All you need is a laptop and an internet connection, and anyone in America can weaponize AI to do work that once required entire departments. With a little AI assist, you can now do your own marketing, design your own products, and “vibe code” your own website. Millions of Americans are building small businesses with tools that used to cost a fortune and/or were not accessible to the masses.

We don’t appreciate data centers enough. More politicians and policymakers should understand that we need to have robust physical infrastructure in place to ensure the viability of our economic system. Data centers are, without question, the heart of the modern American technological economy in 2026. I call it American technological infrastructure, because these are literally the physical factories of the intelligence age.

If we do not build them, the consequences are immediately apparent. Without AI compute infrastructure, America cannot scale an AI economy. Without an AI economy, the one engine pulling the U.S. market forward will stall out, and it doesn’t take Milton Friedman to figure out that we will almost certainly face the real prospect of a debilitating recession.

China is not waiting for us to figure out how to stay on top here. Beijing has made data centers a national strategic priority, and its capacity is on track to nearly double to 60 gigawatts by 2030. China is electricity-rich, and its data centers pay less than half what American facilities pay for electricity. The AI race will be won by whoever capitalizes on the opportunity to scale compute and generate power for the physical infrastructure of the AI age. If America loses this race, we lose the commanding heights of the global economy to our fiercest competitor, which, of course, happens to be an authoritarian one-party state with polar opposite founding principles to those of the United States.

Lawmakers in D.C. do not need to subsidize this revolution with infinite loopholes and pork legislation and the like. They need to just stop strangling innovation and let markets work.

Our best and brightest business leaders want to build the infrastructure necessary to keep America atop the global hierarchy. We should just let them cook.