What to watch for in the US in H2
Explore the shifting economic landscape, with insights on inflation, GDP growth, and the impact of AI investment on productivity and spending.
The economic landscape for the second half of the year is poised for a shift, with expectations of decelerating inflation and reaccelerating GDP growth, driven by falling oil prices. However, potential risks from geopolitical tensions and the stability of AI-driven optimism remain critical factors to monitor.
In the first half of the year, economic growth slowed to nearly 2% annually, stabilising the labour market despite challenges posed by the Iran war. The anticipated decline in energy prices is expected to alleviate inflationary pressures, with headline PCE inflation projected to fall from a peak of 4.2% in May to 3.7% in June.
Investment in AI continues to grow, with significant implications for productivity and consumer spending. While the Federal Reserve remains cautious regarding rate hikes, any resurgence in energy prices or inflationary pressures could prompt a reassessment of monetary policy.
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