US Labor Share Hits Record Low Before AI Boom

The US economy is growing, but the benefits are increasingly flowing to capital owners, not workers. This divergence is a decade in the making, driven by automation, cost discipline, and capital spending, not AI. The AI boom, with its massive data center investments, is accelerating this trend. Much of the equipment, like GPU servers, is imported, so it adds to investment but subtracts as imports, yielding zero net GDP contribution. This explains why GDP growth is modest despite booming investment. Policymakers face a dilemma: whether to let the boom continue or intervene to ensure broader income distribution. The risk is that if only a few firms and their shareholders capture the gains, the tax base and political support for growth may erode.