AI Boom Likely Prevented Recession, David Rosenberg Warns

David Rosenberg, the economist who called both the dot-com and housing busts, said the artificial-intelligence boom probably kept the U.S. economy out of a recession. He now sees early warning signs in the credit market that the AI trade could roll over.

Rosenberg estimated that roughly half of all corporate investment is going into AI-related items. That segment is growing about 18% annually in real terms, he said during an episode of the "Excess Returns" podcast. Capital spending in the rest of the economy, by contrast, is declining.

"AI is sapping the momentum out of the rest of business capital spending," Rosenberg said.

He was responding to Richard Bernstein, the global head of macro at Janus Henderson Investors. Bernstein had argued that money is flowing into data centers instead of residential homes, fueling the housing shortage and affordability crisis. Rosenberg said the backdrop today is fundamentally different from the dot-com era.

"Nobody was talking about a K-shaped economy back then," said Rosenberg, now president of Rosenberg Research and formerly chief North American economist at Merrill Lynch. "The consumer was really strong across the board. You can't say that today."