IMF economist warns AI boom may echo dot-com bust but unlikely to trigger financial crisis
The U.S. artificial intelligence investment boom could end in a dot-com-style market correction, but it is unlikely to spark a systemic financial crisis, according to Pierre-Olivier Gourinchas, chief economist at the International Monetary Fund (IMF).
Speaking at the start of the IMF and World Bank annual meetings in Washington, Gourinchas told Reuters that the AI frenzy mirrors the late 1990s internet bubble, with surging stock valuations and paper wealth driving consumption and inflation. “This is not financed by debt,” he said, adding that a potential crash would hurt shareholders and equity holders, but not destabilize the broader banking system.
The IMF said investment in AI chips, data centers, and computing infrastructure has fueled optimism about future productivity gains, though these benefits have yet to materialize. Unlike the dot-com era — when technology investment jumped 1.2% of U.S. GDP between 1995 and 2000 — AI-related spending has so far increased by only 0.4% of GDP since 2022.
While the IMF does not expect a direct threat to financial stability, Gourinchas cautioned that a correction could trigger a broader repricing of assets and stress on non-bank financial institutions.
The IMF’s latest World Economic Outlook noted that AI investment, alongside lower-than-expected tariffs and easier financial conditions, has helped sustain global growth. However, Gourinchas warned that AI-driven spending and consumption could add to inflation pressures without corresponding productivity gains.
The IMF now projects U.S. inflation to ease more slowly, reaching 2.7% in 2025 and 2.4% in 2026, above the Federal Reserve’s 2% target. He added that the lingering effects of tariffs and reduced immigration are constraining supply and keeping prices elevated.