As vote nears, Trump’s AI gamble fuels economic uncertainty
asserted
gamble → near → uncertainty
- Trump is vowing to expand a ‘golden age’ of prosperity through the end of his presidency.
-
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Trump → vow → presidency
Economists warn that Trump has overseen fiscal policy that would give the federal government fewer tools than it has had in the past to respond to a crisis.
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it → warn → crisis
In September, just weeks before Americans were set to vote in this year’s midterm elections, a sudden panic over the dangers posed by artificial intelligence caught the White House off guard.
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panic → set → guard
A whistleblower had gained viral attention warning the technology could soon pose an existential threat.
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technology → gain → threat
President Trump was quick to dismiss concerns, evoking urgency in the U.S. race to achieve global dominance in superintelligence.
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Trump → dismiss → superintelligence
He rejected calls to negotiate guardrails on the most advanced AI models with China’s leader, Xi Jinping, weeks later, during a prime opportunity to do so in Washington.
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He → reject → Washington
Privately, the president expressed concern that public hysteria over AI could jolt markets that have become excessively concentrated in AI-related stocks.
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that → express → stocks
He had already seen fresh polling that showed widespread bipartisan opposition to the boom in construction of AI data centers, a push by Trump that has cannibalized chips and energy from other sectors of the economy, driving up costs.
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that → see → costs
Now, on the campaign trail in the final days before the vote, Trump is vowing to expand a “golden age” of prosperity through the end of his presidency.
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Trump → vow → presidency
But experts say his policies on AI have set the U.S. economy up for a period of tremendous risk over the next two years.
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policies → say → years
Some of the world’s leading financiers are sounding increasingly alarmed about an AI bubble.
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Some → lead → bubble
Ray Dalio, founder of Bridgewater Associates, has warned that AI stocks have become detached from financial fundamentals, pushing markets to precarious highs.
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stocks → warn → highs
Ken Griffin, the world’s richest hedge fund owner, said last week that AI is “almost certainly” fueling a market bubble that could be on the verge of a burst.
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that → say → burst
Trump’s push to end the war that has raged since 2022 comes as midterm elections could give Democrats control of Congress, expanding their oversight powers.
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elections → end → powers
Economists warn that Trump has overseen fiscal policy that would give the federal government fewer tools than it has had in the past to respond to a crisis.
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it → warn → crisis
“Trump could easily run into a financial crisis before his term is up,” said Kenneth Rogoff, an economist at Harvard.
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Rogoff → run → Harvard
“It is entirely plausible to have a 30% — or more — drop in the stock market, and in the context of an economy so dependent on AI, this in turn could easily lead to a recession and widespread financial distress.”
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this → have → recession
Spending on data center infrastructure last winter and spring accounted for nearly all U.S. economic growth, according to independent analyses.
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Spending → spend → analyses
Without it, growth would have slowed to a mere fraction of a percentage point, leaving the economy nearly stagnant and flirting with recession.
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growth → slow → recession
The Nasdaq 100 has about 70% of its index weight in companies that depend on AI, from semiconductor manufacturers and Big Tech giants to cloud platforms and software providers.
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that → have → platforms
Anthropic, one of the top AI industry leaders, plans an initial public offering next month, while its chief rival, OpenAI, expects to go public next year.
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rival → plan → offering
“Because government finances are already strained, with the national debt on a patently unsustainable trajectory, there is no guarantee of a sharp drop in long-term borrowing rates for the government,” Rogoff continued.
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Rogoff → be → government
“So the options for bailing out the financial sector, or fighting recession, could be much more constrained than during the global financial crisis.
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options → bail → crisis
While doubling down on the promise of an untested, frontier technology, Trump’s other economic policies may be hobbling its growth.
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policies → double → growth
Tariffs have raised the costs of imported chips, servers, networking equipment, metals and electrical components, and visa restrictions have tied the hands of industry leaders trying to secure the world’s best talent.
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restrictions → raise → talent
Runaway federal deficits have driven long-term bond interest rates, adding pressure on AI firms already strapped with debt.
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deficits → drive → debt
Servaas Storm, an economist closely following the AI sector at the Delft University of Technology, said the industry is already facing severe financial headwinds that could precipitate a panic.
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that → follow → panic
Prices for energy, chips and minerals are driving up the cost of doing business, while early AI adopters such as Microsoft, Meta and Walmart are scaling back its use as employees spend too much time correcting errors, cleaning up low-quality output and addressing security lapses.
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employees → drive → lapses
Slower adoption could further complicate the search for revenue, particularly for companies already struggling to monetize the technology.
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adoption → complicate → technology
For now, hyperscalers are shouldering the cost of financing frontier AI labs that, as Storm put it, “do not have a credible path to profitability.”
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Storm → shoulder → profitability
“There is indeed an AI bubble in the stock market and in data center construction, which could pop rather soon, as rising debt loads and elevated interest rates could prove too much to sustain it,” Storm said.
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Storm → be → it
“That moment is not imminent, but it is approaching — and it will very likely happen before the end of Trump’s presidency.”
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it → approach → presidency
Alarm mounted throughout the summer as researchers at leading AI labs found the pace of development far outstripping their expectations.
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pace → mount → expectations
An economy already under duress from Trump’s other economic policies — from tariffs and tax cuts to the Iran war — could precipitate further pain, said Darrell Duffie, a finance professor at the Stanford Graduate School of Business.
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Duffie → precipitate → Business
Leading AI companies are already running “day-after” drills in anticipation of an AI-related crisis within the next year, according to Axios.
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companies → lead → Axios
Americans head into election day deeply pessimistic about the economy, with 77% rating it fair or poor, according to a Fox News poll.
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it → head → poll
A separate CNBC survey found that just 34% approve of Trump’s handling of the economy, while 35% of Republicans disapprove — a record high within his own party.
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% → find → party
Inflation has fallen sharply from its 9% peak in 2022, during a pandemic-era surge, reaching 2.9% by the end of Biden’s presidency.
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Inflation → fall → presidency
Under Trump, it has climbed once again to 3.7%, driven by rising energy, transportation and housing costs — among the top concerns for voters entering next month’s vote.
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it → climb → vote
…and 4 more, not listed.
The Aporia
