America is in the midst of its strongest productivity surge in decades. The evidence is more ambiguous about how much AI is the reason.

Why it matters: Companies are pouring hundreds of billions of dollars into AI, a massive bet that the technology will deliver sweeping productivity gains across the economy.

• But so far, the productivity gains may have more to do with less sexy developments, including the more intensive use of capital equipment and a post-pandemic surge in entrepreneurship now paying dividends.

What they're saying: "Translating individual productivity to organizational productivity — there's a lot of slip between cup and lip," Keith Waddell, CEO of staffing firm Robert Half, told investors last week.

• "We're not ignoring that there are productivity gains for our people, and we're getting some," he added.

S&P Global aims for roughly 2% in annual productivity gains, but it cannot isolate AI's contribution from other operational changes.

• "Some of that is directly AI. Some of that is non-AI. Most of it is actually mixed and integrated," CFO Eric Aboaf said yesterday on the firm's earnings call.

Between the lines: Increased investment and more intensive use of labor and equipment have contributed 1.3 percentage points to annual productivity growth since early 2023, according to the San Francisco Fed — nearly twice their contribution over the preceding two decades.

• A broader measure of efficiency that strips out the effects of additional investment and more intensive use of resources has grown by 0.7% annually, compared with 0.5% from 2005 to 2022.
• Some of the investment may itself be AI-related, such as software that helps employees accomplish more in less time.
• In the Fed's Beige Book, San Francisco district businesses credited AI and traditional improvements, including training and streamlined processes, roughly equally for productivity gains.

The other side: The productivity gains are more apparent among companies developing AI.

• Anthropic disclosed in its IPO filing this week that Claude wrote more than 90% of contributions to its codebase last month.
• The average daily volume of code contributed per engineer was more than 45 times its 2024 level, according to the prospectus.

What to watch: Whether AI's benefits spread beyond tech giants and show up in broader corporate financial results.

• Revenue per employee and profit margins have climbed among the Magnificent Seven companies but remained broadly flat across the other 493 companies in the S&P 500, Apollo chief economist Torsten Slok wrote over the weekend.
• "[T]he AI story will be decided in the S&P 493, not the Mag 7," Slok wrote.

The U.S. economy will likely show the strongest overall growth in a year when third-quarter data is released tomorrow, powered by consumer spending and AI investment.

Driving the news: The Commerce Department's initial release of Gross Domestic Product data is scheduled for 8:30am ET tomorrow.

• Analysts surveyed by Bloomberg anticipate that it will show a 3.2% annual rate of growth in the July-through-September quarter; the Atlanta Fed's GDPNow tracker pegs it at 3.3%. Either result would be the most rapid GDP growth since the third quarter of 2025.
• September data on personal consumption, income and inflation will be released at the same time. The Personal Consumption Expenditures Price Index, preferred by the Fed, is expected to show a 0.5% rise for the month and tick up to 3.6% over the last 12 months.

State of play: The biggest contributors to the projected strong growth are likely to be consumer spending, especially by affluent households sitting on strong gains in wealth, and business investment, fueled by the AI buildout.

• Goldman Sachs economists, for example, expect a 3.4% annual growth rate in personal consumption expenditures and a whopping 10.2% growth rate in business fixed investment.

Yes, but: Those gaudy investment numbers will be partly offset by a surge in imports, reflecting the role of imported semiconductors in the data center buildout.

• This morning, the government released preliminary numbers showing that the trade deficit in goods widened by $2.8 billion, to $134.9 billion in September — the largest gap since March 2025.
• That implies that trade will be a net subtraction from GDP — a 3.25 percentage point drag, per Grace Zwemmer with Oxford Economics.
• "However, the strong September showing from capital goods imports means that a lot of the drag from net exports will be offset by a substantial build in private inventories and a rapid increase in business equipment spending," Zwemmer wrote.

The bottom line: The AI capital spending boom is boosting GDP, but less than its headline numbers imply because it depends on imports.