The U.S. Labor Department is set to release September employment figures Friday as the AI investment boom drives economic growth and adds more bonds to the market. Economists surveyed by Bloomberg estimated payrolls rose by about 90,000, with unemployment holding at 4.1 percent. Behind those figures is a labor market where hiring has slowed and workers’ pay hasn't kept pace with inflation.
Who Gets the Gains
AI infrastructure is helping power the economy, but financial rewards and risks are unevenly distributed. Data center construction and other AI projects have lifted growth expectations, while investors anticipate the Federal Reserve may keep interest rates elevated to prevent the economy from overheating. Building data centers creates jobs, though measuring AI-related job losses remains difficult.
Employment gains have concentrated in education, health care and social assistance. Manufacturing, finance and technology have lagged or lost jobs. Baby boomers have retired at a notable pace, and immigration restrictions under the Trump administration have limited workforce entrants, while labor force participation among midcareer workers remains strong.
Inflation has outpaced workers’ pay in recent months. Price increases accelerated after the war with Iran began, eroding pay gains; Friday’s employment report also includes a monthly update on average hourly earnings. The report counts jobs and wages, but those figures sit beneath a much larger financial bet companies and investors are making.
Mark Zandi, chief economist at Moody’s Analytics, said AI accounted for a substantial share of U.S. economic growth this year. The latest government report put real gross domestic product growth at an annual rate of 2.3 percent in the second quarter. Zandi estimated 0.6 to 0.7 percentage points, or perhaps 30 percent of inflation-adjusted growth this year, came directly or indirectly from the AI boom.
A Concentrated Bet, A Shared Risk
The technology boom has also driven financial-market gains and concentrated the market’s exposure. The iShares U.S. Technology ETF, described as a rough proxy for AI-led tech stocks, returned 33.7 percent for the calendar year through Thursday. The ProShares S&P 500 Ex-Technology ETF returned 4.1 percent. In May, 10 technology companies accounted for more than 40 percent of the S&P 500’s market capitalization.
The Vanguard 500 Index Fund’s largest holdings are Nvidia, Apple, Microsoft, Amazon, Alphabet, Broadcom, Meta, Micron and Tesla, followed by JPMorgan Chase. All but JPMorgan are involved in AI development to some degree, with Apple described as a laggard. A major decline in AI stocks could reach people holding them in retirement funds. The upside has been striking. So has the possibility that people whose savings are tied to the market absorb the fallout.
Zandi said rising asset prices and corporate spending are stimulating the broader economy. In February, he estimated that “for every $1 increase in net worth, consumer spending ultimately increases by 2 cents.” He said the wealth effect added a full percentage point to consumer spending growth and more than 0.7 percent to GDP growth in 2025. Rising wealth has helped the richest 20 percent of consumers drive spending this year despite declining overall consumer sentiment. If markets crash, Zandi said, “the economy would take a hit.”
Debt Builds the Infrastructure
The AI buildout requires substantial borrowing, and higher bond interest rates make projects more expensive. Goldman Sachs estimated in August that corporate spending on data centers, power supplies and infrastructure would total $1 trillion worldwide in 2026. Stijn Van Nieuwerburgh, a Columbia University business professor, estimated U.S. AI companies’ total capital expenditures could reach $10.3 trillion by 2032. He said annual spending could average 3.63 percent of GDP and become the biggest infrastructure project in U.S. history, “larger, relative to the economy, than the major U.S. canal, railroad, electrification, highway and telecommunications investment booms.”
The 10-year U.S. Treasury yield reached 5.34 percent Thursday before easing to about 5.24 percent; it ended the day at its highest level since 2007. The 10-year French bond yield reached 4.92 percent, its highest since 2002, while benchmark yields in Italy and Japan rose. Analysts and investors have linked rising yields to AI-driven growth expectations, inflation pressure and concerns about government debt.
Mahmood Pradhan, a nonresident fellow at Bruegel and former deputy director of the European department at the International Monetary Fund, said, “The Middle East war has really turned everything around.” He said central banks were again raising rates, increasing government costs and reducing money available to support the economy if conditions worsened. Last month, the Federal Reserve, European Central Bank and Bank of Japan increased rates; traders expected further increases this year. The Bank of England signaled it could raise rates as well.
France is trying to pass a budget that would slightly reduce its deficit, but repeated difficulties and a presidential election set for April have made investors skeptical about the country’s near-term fiscal prospects. The article describes investment decisions, market exposure, and government and central-bank responses; it identifies no community-led alternative. Capital Economics, an independent financial research service based in London, warned Tuesday: “There are growing signs that the A.I. equity market boom is in its final stages.”