I don't know... 1.2% of GDP just doesn't seem that extreme to me. Certainly nowhere near "eating the economy" level compared to other transformative technologies or programs like:
- Apollo program: 4%
- Railroads: 6% (mentioned by the author)
- Covid stimulus: 27%
- WW2 defense: 40%
As a % of GDP it doesn’t seem very large, but that’s because our GDP is so massive. This is still an entire Norway’s worth of GDP.
Like 1.2% isn’t a big percentage, but neither is 3.4% - our total military expenditures this year.
You’re right that it’s large in an absolute sense, but any sector of the US economy is going to be large in an absolute sense. It’s not a very meaningful statement. Using percentages allows comparison to other items, which for some purposes gives a more useful sense of size. For instance, based on your numbers, AI expenditure is about 1/3 the total military expenditure. I tend to agree that this is less than I expected, and generally makes me feel a bit better about the (imo excessive) hype.
It's small as a part of the economy. It's huge as a completely new thing. The US economy in total has been growing something like an average of 2.5% over recent years. Something that is all-the-growth-of-the-last-year-in-one-place is pretty significant.