US Pulse: AI Is Increasingly Driving GDP

US GDP growth is increasingly driven by a surge in AI adoption and related private investment, masking a significant slowdown in consumer spending due to high prices and a cooling labour market.

Key Takeaways

• 1.AI-related investment is the primary driver of US GDP growth, contributing 1.4ppt to Q1 GDP, while non-AI investment is lacklustre.
• 2.Consumer spending is slowing significantly due to high prices, weak sentiment, and affordability constraints, growing at a below-trend 1.4% saar in Q1.
• 3.The FOMC is expected to maintain a patient policy stance, viewing inflation risks from energy price shocks as manageable without urgent action.

Table of Contents

• AI and the economy
• The week ahead
• The week that was
• Data and policymakers' guidance underscore Fed patience
• The AI and non-AI divide in economic growth
• Fedspeak signals patience
• Data pulse: the week ahead
• Data pulse: the week that was

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