Weekly update - United States: AI and Fiscal Stimulus Sustain Economic Momentum

Despite the multiplication of supply shocks in recent years, the U.S. economy remains the most dynamic among developed economies and is likely to remain so over the medium term. This momentum is driven by the rise of AI as well as the succession of fiscal support packages since Covid. The counterpart of this dynamism is a higher inflation rate, which is accelerating in the United States relative to other economies, implying that the Federal Reserve could become more restrictive.

Growth driven by AI investment and fiscal stimulus. Despite the multiplication of negative shocks since 2020, the U.S. economy remains on a highly favorable trajectory, well ahead of its peers. Since 2022, U.S. economic activity has increased by more than 10%, compared with 7% for the average developed economy and 4% for the euro area. This growth primarily reflects the rise of AI. Capital expenditures exceeded USD 700 billion between 2024 and 2025, and more than an additional USD 900 billion is expected over the next twelve months. Although a large share of these investments relies on imports, their use takes place in the United States, as do the construction of data centers and spending on LLMs. The rise of AI also contributes to growth through
substantial wealth effects. 

Indeed, the strong performance of U.S. equity markets, largely reflecting the excellent performance of stocks within the AI ecosystem, has resulted in growth of more than 20% in the net financial wealth of U.S. households. This increase in wealth has supported consumption in recent years despite slower wage growth. Although these gains are mainly concentrated among the wealthiest households, those households also account for the majority of consumption in the United States. A second factor supporting activity is the continuation of stimulus measures
under successive U.S. administrations, notably the One Big Beautiful Bill Act, which includes significant tax cuts for households and has helped maintain strong domestic demand.

Inflation as the counterpart of strong growth. While U.S. growth remains robust, inflation also remains elevated, reflecting both supply shocks such as tariffs and the persistence of strong domestic demand. Services inflation, a eflection of domestic inflationary pressures, remains around 3.5%, well above its trend during the 2010s. As a result, inflation is expected to remain above the Federal Reserve’s 2% target over the coming quarters. This situation increases the likelihood that the Fed will begin a tightening cycle in the coming quarters.

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