While the Trump administration has gone all in on an emerging technology, a leaked internal report from the Treasury Department revealed Monday that officials are well aware of the “significant risk” it poses, a risk that could “send shockwaves throughout the entire economic system,” NOTUS reported.
That emerging technology is generative artificial intelligence, with the companies leading its development receiving significant support from the Trump administration, such as when President Donald Trump signed an executive order last December to block states from enacting their own laws to regulate the technology.
And yet, even as it champions GenAI companies, the Trump administration's own Treasury Department appears well aware of the risks that support carries, according to the draft report obtained by NOTUS.
“Career Treasury analysts found that AI firms are more deeply entrenched in the U.S. economy than their dotcom predecessors and pose significant risk to the entire system if financial conditions change, productivity goals are missed or various choke points stymie growth,” NOTUS’ report reads.
“A downturn in the AI market would send shockwaves throughout the entire economic ecosystem, the analysts wrote."
Should AI companies struggle financially, Treasury analysts predicted that “stock markets, private credit markets, companies financing data center buildouts, cloud providers, chip manufacturers and utilities would all feel the effect,” according to NOTUS review of the report.
“AI investors are taking risks so significant that much of the financial system now rests upon AI meeting expectations for productivity gains and profitability,” NOTUS’ report reads.
In public, the Trump administration has “shown nothing but bullishness toward the AI industry,” NOTUS’ report reads. It’s created an AI Action Plan aimed at speeding the building of GenAI data centers, repealed Biden-era regulations around AI, and publicly backed major AI projects.