Steve Eisman: U.S. Economy Stagnates Without AI, Growing Under 0.5%
Steve Eisman, a prominent investor known for predicting the 2008 financial crisis, has expressed serious concerns about the U.S. economy’s growth. According to Eisman, the economy’s true performance significantly deteriorates when excluding artificial intelligence (AI) contributions. In a recent episode of The Real Eisman Playbook podcast, he described the current economic landscape as a “tale of two cities.”
AI’s Impact on U.S. Economic Growth
Eisman highlighted that the U.S. GDP, estimated at $29.18 trillion in 2024, will likely see a growth rate of merely 1.8% in 2025. This figure translates to approximately $530 billion. However, with AI spending from major companies, often referred to as the “Magnificent Seven,” such as Google, Amazon, and Microsoft, amounting to around $400 billion, the actual economic growth appears significantly less robust.
“The U.S. economy is not even growing, really, 50 basis points outside of AI,” Eisman asserted. This indicates underlying weaknesses that must be addressed.
Concerns Over Job Growth and Inflation
As job growth stagnates and inflation rises, analysts voice increasing concerns about the economy’s health. A recent report from the New York Federal Reserve Bank revealed troubling trends in household debt, which rose by $185 billion to reach $18.39 trillion by the second quarter of 2025. Key statistics include:
- Auto loan balances increased by $13 billion, totaling $1.66 trillion.
- Student loan debt climbed $7 billion to hit $1.64 trillion.
The Auto Sector: A Warning Sign
Lakshmi Ganapathi, founder of Unicus Research, discussed the difficulties consumers face, particularly in the auto sector. She noted that during the pandemic, government stimulus measures gave a false sense of wealth. People qualified for premium loans despite their actual financial situations, leading to inflated credit scores.
The situation was exacerbated by rising car sales during the pandemic. Many consumers purchased vehicles above sticker prices, compelled by supply chain issues and heightened demand.
Challenges for Consumers and Financial Institutions
Ganapathi pointed out that some auto manufacturers miscalculated demand, resulting in overpriced vehicles. Consequently, banks are now reluctant to repossess cars due to decreased values, making it financially unviable. The trend shows increasing car repossessions, accompanied by dangerous conditions for repossession agents.
In conclusion, Eisman and Ganapathi’s insights underline the precarious state of the U.S. economy. The intertwined issues of inflation, household debt, and fragile growth underscore a need for awareness and potential reform.
