Businesses Bet Big on AI While Cutting Workers—Economists Say That’s Produced ‘Zero Growth’
New survey data shows two-thirds of CFOs plan to increase AI investments while cutting headcount, despite warnings that the approach hasn’t helped many bottom lines.
The AI Paradox: Billions Spent, Zero Growth (For Now)
Companies are pouring billions into Artificial Intelligence, hoping to supercharge productivity and automate tasks. But what if all that investment isn't actually moving the economic needle? Recent insights from economists suggest a surprising truth: despite the hype, AI's contribution to economic growth has been "basically zero" so far.
This stark reality creates a fascinating paradox. On one hand, U.S. chief financial officers are planning significant increases in AI investment this year, while simultaneously cutting staffing funds. They're making a clear bet on technology over human capital. On the other hand, experts like Austan Goolsbee of the Chicago Federal Reserve and Goldman Sachs chief economist Jan Hatzius are pushing back against the narrative of AI's "wonderous impacts," pointing to its minimal contribution to GDP.
The Great Disconnect
Early estimates by some economists painted a picture of AI driving a significant portion of U.S. economic growth. This reasoning was fueled by the massive investments in AI development, deployment, and the construction of energy-hungry data centers. However, Goolsbee notes that much of this investment involves "imported goods," which skews the overall GDP effect.
Joseph Briggs, an analyst at Goldman Sachs, echoes this sentiment, suggesting that the "deafening hype" surrounding AI has overshadowed warnings about the significant gap between investment and returns. It seems the intuitive story of AI's potential has, in some ways, prevented a deeper examination of its actual output.
A Young Technology, A Slow Start
In fairness to the tech giants like OpenAI, Anthropic, Apple, and Microsoft, AI is still a young and evolving technology. Businesses are adopting it at a measured pace, which naturally limits immediate productivity gains. An MIT study last August even found that only 5% of companies producing or purchasing AI reported any return on their investment.
This slow start, however, could also be a precursor to rapid acceleration. As adoption rates increase and companies learn to leverage AI more effectively, the productivity gains could explode.
The Monumental Wager
Despite the current lack of significant economic impact, CFOs are doubling down. A Gartner survey of over 300 CFOs reveals that three-quarters plan to increase spending on "growth-driving functions, technology and artificial intelligence" this year, with nearly half expecting a boost of at least 10%.
"Sales and IT are expected to see the largest budget increases in 2026," says Nauman Abbasi, Vice President Analyst at Gartner Finance. But here's the kicker: at the same time, these companies plan to reduce hiring and staffing funds. This "structural pivot from labor expansion to optimization driven by automation and AI" is a significant shift.
The Big Question Mark
When we factor in the economists' warnings about AI's meager contributions thus far, Gartner's forecast of a 10.8% increase in AI-driven tech spending worldwide this year, reaching $6.15 trillion, begins to look like a monumental bet.
"CFOs recognize that AI is no longer just an experiment — it’s fast becoming a core enterprise capability," Abbasi explains. "The shift from cautious pilots to committed scale is driven by tangible gains in productivity and decision-making."
The belief is that as "AI literacy grows and legacy systems are modernized," we'll see accelerated investment and deeper integration. But the current data presents a compelling question: Are business leaders making a necessary wager to avoid missing out on future benefits, or are they sinking billions into a technology that has yet to deliver on its grand promises? Only time will tell if AI will truly become the economic growth engine many envision.