Treasury Secretary Scott Bessent on Tuesday dismissed fears that the U.S. economy has become dangerously addicted to artificial intelligence (AI) spending, arguing instead that investment is poised to broaden into a wider industrial resurgence.
Bessent Sees Growing Manufacturing Sector Along With AI
Speaking on CNBC's “Squawk Box,” Bessent pushed back against the narrative of an impending “AI bubble.”
His comments came in response to reports suggesting that business investment in AI may have accounted for up to half of the GDP growth in the first six months of the year, raising concerns about economic vulnerability should that sector cool down.
While acknowledging that the “AI build out has been tremendous” and will continue, Bessent countered the idea of over-reliance by pointing to tangible growth in traditional manufacturing.
He cited a recent visit to his hometown of Charleston, South Carolina, where Boeing Co. (NYSE:BA) is undertaking a “substantial expansion” of its Dreamliner plant, adding 1,000 high-paying jobs.
Higher CapEx, Fiscal Policies To Boost Manufacturing
Bessent predicted this trend would accelerate next year. Thanks to upcoming trade deals and tax legislation, he expects to see a “broadening out of the CapEx cycle” where capital expenditure spreads beyond big tech and into the wider economy.
“Historically, CapEx always leads to more jobs,” he noted.
Despite emphasizing industrial breadth, Bessent stressed that maintaining an edge in artificial intelligence remains vital, describing the competition with China as “pass/fail.”
Bessent Compares Current Economy To 1990s Greenspan Era
Bessent framed his overall economic outlook by comparing the current moment to the 1990s Alan Greenspan era.
He expressed excitement about the prospects for “substantial non-inflationary growth” driven by deregulation and technology-fueled productivity. This environment, he argued, could support a scenario of lower interest rates alongside higher growth.
Bessent's bullish outlook on tech sustainability echoes recent sentiment from market analysts like Wedbush’s Dan Ives, who has also characterized the current landscape as the early stages of an AI revolution rather than a speculative bubble.
On Wednesday, the futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading higher after a positive close on Tuesday.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and the Nasdaq 100 index, respectively, ended higher on Tuesday. The SPY was up 0.94% at $675.02, while the QQQ advanced 0.62% to $608.89, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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