Is GDP Failing to Capture AI?

Gross domestic product measures the economic transaction in an economy, according to quantities bought and sold and market prices. But does this method work for AI? Anton Korinek and Patrick McKelvey work through the question in “Where is AI in GDP Statistics?“(Peterson Institute for International Economics, May 2026, both a readable Policy Brief and an underlying research paper are available). Here’s the basic issue. The authors calculate that the total amount currently spent on AI computing power is (roughly, depending on underlying assumptions) about $250 billion per year. This measures the AI bought and sold in the market, and thus is clearly part of GDP. However, the AI chips are becoming more efficient:”As chips became more efficient, each dollar of compute spending bought more physical computing capacity. Measured in H100-equivalent units, US AI computing capacity grew at more than 200 percent per year, outpacing nominal spending.” Also, the AI algorithms are becoming more…