This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here
My three takeaways (below) need to be read in the order I supplied them. This builds the framework of concern. On this odd circumstance found in the current U.S. economy.
A. I rank-ordered real U.S. GDP growth (or analogues) in the AUG Zacks econ report.
• Ones that reflect the current aggregate demand strength in the U.S. economy.
1. Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased +3.9% in the second quarter, compared with an increase of +1.7% in the first quarter. That averages
+2.8%
2. July 2026 Consensus Economics in London real U.S. GDP growth has +2.1% across 2026 and +2.1% in 2027. That is +2.1%.
3. Q2-26 real GDP growth at +1.5%. NY Fed Nowcast for Q3-26? +2.2%. That averages to +1.85%
4. August 10th Conference Board has: +1.5% in Q2, +1.4% in Q3, +1.6% in Q4, and +1.9% in Q1-27. These average to +1.6%.
In general, there is nothing alarming, or exciting, about this set of U.S. real GDP data.
B. However, Harvard economist Jason Furman calculated that tech infrastructure and software make up roughly 4% of U.S. GDP, yet drove 92% of GDP growth in early 2025.
• Without it, the rest of the U.S. economy grew aggregate demand at a mere +0.1% annualized rate.
His distinct commentary later noted narrow slices of the U.S. AI economy are expanding at hectic, breakneck real GDP growth speeds (an 8% size AI tech sector, growing at +14%).
Some context on this tech-driven growth quote:
The 4% Share: Investment in information processing equipment and software represents a small fraction of the overall U.S. economy.
The 92% Contribution: This narrow sector fueled nearly all recorded U.S. GDP growth during the first half of 2025 -- due to the artificial intelligence (AI) and data center boom.
The +0.1% real U.S. GDP growth baseline: Stripping out the AI tech infrastructure buildout leaves the broader U.S. economy (retail, services, manufacturing) at a near-standstill.
This bifurcated assessment of the U.S. economy is much more concerning. The mainstream U.S. economy is basically at a stand-still.
A major pullback in AI infrastructure spending will tip the U.S. economy into recession.
C. The conclusion in Zacks Special Deep Dive into Generative AI data is worth refreshing.
Fresh FRED sector data showed what has been achieved, via generative “AI”.
So far.
• The U.S. workforce has collectively gotten -- to as much as 15% of total work hours assisted in a few key knowledge-intensive sectors -- by Q2 2026.
• Actual aggregate time savings for All Employed Adults remains modest, moving gradually from ~1.4% to ~2.1%.
That’s not impressive, in a macro context.
At all.
In the near term, this creates a clear “AI” share valuation risk.
If euphoric stock market pricing assumes immediate, U.S. economy-wide profit margin expansion, while the U.S. macro data shows a gradual 70-basis-point gain in aggregate efficiency?
My closer: Corporate return on invested capital (ROIC) metrics will face earnings pressure.
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Fresh Insight from FRED Generative "AI" Data
This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here
My three takeaways (below) need to be read in the order I supplied them. This builds the framework of concern. On this odd circumstance found in the current U.S. economy.
A. I rank-ordered real U.S. GDP growth (or analogues) in the AUG Zacks econ report.
• Ones that reflect the current aggregate demand strength in the U.S. economy.
1. Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased +3.9% in the second quarter, compared with an increase of +1.7% in the first quarter. That averages
+2.8%
2. July 2026 Consensus Economics in London real U.S. GDP growth has +2.1% across 2026 and +2.1% in 2027. That is +2.1%.
3. Q2-26 real GDP growth at +1.5%. NY Fed Nowcast for Q3-26? +2.2%. That averages to +1.85%
4. August 10th Conference Board has: +1.5% in Q2, +1.4% in Q3, +1.6% in Q4, and +1.9% in Q1-27. These average to +1.6%.
In general, there is nothing alarming, or exciting, about this set of U.S. real GDP data.
B. However, Harvard economist Jason Furman calculated that tech infrastructure and software make up roughly 4% of U.S. GDP, yet drove 92% of GDP growth in early 2025.
• Without it, the rest of the U.S. economy grew aggregate demand at a mere +0.1% annualized rate.
His distinct commentary later noted narrow slices of the U.S. AI economy are expanding at hectic, breakneck real GDP growth speeds (an 8% size AI tech sector, growing at +14%).
Some context on this tech-driven growth quote:
The 4% Share: Investment in information processing equipment and software represents a small fraction of the overall U.S. economy.
The 92% Contribution: This narrow sector fueled nearly all recorded U.S. GDP growth during the first half of 2025 -- due to the artificial intelligence (AI) and data center boom.
The +0.1% real U.S. GDP growth baseline: Stripping out the AI tech infrastructure buildout leaves the broader U.S. economy (retail, services, manufacturing) at a near-standstill.
This bifurcated assessment of the U.S. economy is much more concerning. The mainstream U.S. economy is basically at a stand-still.
A major pullback in AI infrastructure spending will tip the U.S. economy into recession.
C. The conclusion in Zacks Special Deep Dive into Generative AI data is worth refreshing.
Fresh FRED sector data showed what has been achieved, via generative “AI”.
So far.
• The U.S. workforce has collectively gotten -- to as much as 15% of total work hours assisted in a few key knowledge-intensive sectors -- by Q2 2026.
• Actual aggregate time savings for All Employed Adults remains modest, moving gradually from ~1.4% to ~2.1%.
That’s not impressive, in a macro context.
At all.
In the near term, this creates a clear “AI” share valuation risk.
If euphoric stock market pricing assumes immediate, U.S. economy-wide profit margin expansion, while the U.S. macro data shows a gradual 70-basis-point gain in aggregate efficiency?
My closer: Corporate return on invested capital (ROIC) metrics will face earnings pressure.