Fed Staff Estimate AI Buildout Drove Third of Q1 Growth

Federal Reserve staff estimated in a July 17 research note that spending on software, data centers, power facilities, computers and peripheral equipment added about 0.73 percentage point to the US economy's 2.1% annualized first-quarter growth, or roughly one-third. The authors, Paul E. Soto, Mason Thieu and Jeffrey S. Allen, adjusted for net imports of computers and parts, which subtracted about 0.45 percentage point, and stressed the calculation is an imperfect proxy because official accounts do not isolate AI investment.

Fed Staff Estimate AI Buildout Drove Third of Q1 Growth Federal Reserve staff estimated in a July 17 research note that spending on software, data centers, power facilities, computers and peripheral equipment added about 0.73 percentage point to the US economy's 2.1% annualized first-quarter growth, or roughly one-third. The authors stressed that the calculation is an imperfect proxy because official accounts do not isolate AI investment and much of the underlying hardware is imported. A Federal Reserve staff research note published July 17 estimated that selected components associated with the AI buildout added about 0.73 percentage point to the US economy's 2.1% annualized growth rate in the first quarter of 2026 . On that basis, the estimate is roughly one-third of the quarter's measured growth. The authors, Paul E. Soto, Mason Thieu and Jeffrey S. Allen, combined contributions from software, data-center construction, power facilities, computers and peripheral equipment. They then adjusted for net exports because servers, chips and networking equipment used in the buildout often come from outside the United States. A proxy, not an AI line item The note is explicit about its limitations. National accounts do not contain a dedicated AI-investment category, so the calculation uses broader components that include non-AI activity. Power-facility spending, for example, also covers electrical infrastructure outside data centers, while computer-equipment data include ordinary business hardware. The authors describe the series as a way to track the buildout, not a precise measure of AI's total economic contribution. Imports also change the headline. Axios reported that gross spending across the selected categories contributed about 1.18 percentage points in the first quarter, while net imports of computers, peripherals and parts subtracted about 0.45 point. In the fourth quarter of 2025, the same framework produced only a 0.14-point net contribution because a 0.61-point import drag offset most of the gross investment boost. Why other estimates differ PYMNTS reported on August 4 that Oxford Economics economist Michael Pearce also estimated AI-linked activity at around one-third of current US growth. That broader account included technology-company spending and borrowing, data-center construction, municipal revenue, hiring, and a stock-market wealth effect. It also described possible crowding-out and inflation pressure from scarce land, construction capacity, and memory chips. Those estimates are related but not interchangeable. The Federal Reserve staff calculation focuses on selected investment components and their treatment in GDP accounting. A broader macroeconomic estimate can include financial-market and consumption channels that do not appear in the same calculation. For infrastructure and data teams, the durable signal is the scale of the buildout and its dependence on imported hardware, power, construction, and utilization. The one-third figure should be read as a bounded estimate for a particular period and method, not proof that AI already generates one-third of the country's total output or productivity. Key Points - 1Federal Reserve staff estimated that selected AI-buildout components added 0.73 percentage point to the first quarter's 2.1% annualized US growth rate. - 2The estimate adjusts for imported computers and parts, which reduced the measured domestic contribution by about 0.45 percentage point in the quarter. - 3Because national accounts do not isolate AI, the calculation uses broad investment categories and should be treated as a proxy rather than a precise AI-output measure. Scoring Rationale A Federal Reserve staff estimate connects AI-related infrastructure spending to a material share of first-quarter US growth and documents the import adjustment. The result is operationally important for compute and data-center planning, but it remains a proxy built from broad national-account categories rather than a direct AI measurement. Sources Primary source and supporting public references used for this report. Practice with real FinTech & Trading data 90 SQL & Python problems · 15 industry datasets Active Verified Users by Income TierEasy /problems/sql/active-verified-users-by-income Technology Stocks with High BetaMedium /problems/sql/technology-stocks-with-high-beta Portfolio Performance ScorecardHard /problems/sql/portfolio-performance-scorecard 250 free problems · No credit card See all FinTech & Trading problems /problems/datasets/fintech