We are increasingly confident that the surge in AI-related investment this year marks the start of a multi-year capex boom. Even allowing for ongoing labour market softness that will weigh on consumption growth, we expect GDP growth to be 2.5% in both 2026 and 2027. With core inflation remaining above the 2% target for some considerable time, we think the Fed will cut its policy rate by only 25bp in 2026, putting the new Fed Chair and President Trump at loggerheads almost immediately.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services