Is This What an Economic Bubble Looks Like?
Foreign Policy
by Cameron Abadi and Adam ToozeFebruary 13, 2026
AI-Generated Deep Dive Summary
The U.S. artificial intelligence sector is set to invest $650 billion this year, primarily in data center infrastructure, signaling a significant shift in economic focus. This spending spree raises questions about whether it resembles an economic bubble, akin to past tech booms or even wartime spending. Economist Adam Tooze highlights that while the investment represents 2% of U.S. GDP—on par with previous tech booms—it falls short of historic extremes like 19th-century railroad investments or Japanese real estate in the 1980s.
This level of spending, driven by private credit and business cash reserves, functions similarly to a fiscal stimulus, according to Keynesian principles. It fosters multiplier effects, creating jobs and boosting local economies through data center construction and clustering. Regions like Virginia’s data hub and California’s Bay Area are experiencing notable growth, with real estate prices surging due to AI wealth creation.
AI investment is reshaping the U.S. economy by contributing up to 20-30% of GDP growth, similar to China’s green energy sector. This shift is significant for politics as it underscores a potential new driver of economic resilience. However, concerns remain about sustainability and overvaluation risks, as AI returns remain uncertain. The ripple effects—both positive and potentially destabilizing—are critical to monitor for policymakers and investors alike.
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Originally published on Foreign Policy on 2/13/2026