AI Surge Sparks ‘Dutch Disease’ Risk for US Economy, Says Apollo’s Torsten Slok

When you hear the term “Dutch disease,” you probably picture oil‑rich nations watching other industries wither. Torsten Slok, Apollo Global Management’s chief economist, says we’re seeing a very similar story unfold in the United States – only the boom is in artificial intelligence, not oil.

In a research note released on Friday, Slok points out that AI‑related capital spending is gobbling up money, electricity and skilled workers at a breakneck pace. Data‑center farms are sprouting faster than any construction wave we’ve seen in recent memory, and the demand for high‑end chips and grid capacity is skyrocketing.

That may sound like good news for the tech sector, but the flip side is a subtle – yet troubling – imbalance. Sectors that are already feeling the pinch from higher borrowing costs – think housing, auto manufacturing, even small‑business retail – are now forced to compete for a shrinking pool of financing, power and talent.

“It’s a textbook case of Dutch disease,” Slok writes, borrowing a phrase from economics textbooks. The AI surge is the bright, glittering magnet, and the rest of the economy is the reluctant magnetite trying to hold on.

Normally, when interest rates climb, the whole economy cools a little. Yet, oddly enough, AI spending appears immune. The hyperscalers – the tech giants that run massive cloud platforms – keep plowing cash into GPUs, custom silicon and the next generation of super‑computing racks, seemingly undeterred by tighter monetary policy.

For the Federal Reserve, this creates a puzzling dilemma. Rate hikes are already squeezing the housing market and slowing auto sales, but they barely dent the AI construction sites that continue to pour in funds. Slok warns that if AI‑driven growth remains strong while also stoking inflationary pressures, the Fed could find its traditional levers blunt.

“Monetary policy alone won’t fix this sectoral skew,” he says. The only lasting remedy, in his view, is to broaden the supply side – more power generation, a ramp‑up in semiconductor production, and a faster rollout of the physical infrastructure that underpins AI workloads.

There’s also a cautionary note hidden in the data. Slok estimates that AI investment is growing at roughly 0.85 percentage points of GDP each year – outpacing the housing boom’s 0.5 pp and the telecom surge’s 0.15 pp. That pace is impressive, but it also means a rapid unwinding is possible if the hype fades or demand stalls.

In market terms, the headline numbers are mixed. The SPDR S&P 500 ETF (SPY) was flat in after‑hours trade, while the Invesco QQQ (QQQ) edged up a hair and the Dow‑Jones‑tracking DIA nudged higher. Investor sentiment on Stocktwits still leaned bullish for the S&P 500, but the broader picture is one of uneven growth.

In short, the AI boom is both a catalyst for innovation and a source of hidden risk. Policymakers, investors and even ordinary workers should keep an eye on how resources are allocated, because an over‑concentration in one sector could leave the rest of the economy scrambling for a seat at the table.