The summer of 2026 has been dominated by the AI boom. Some fear that AI is advancing too quickly for thoughtful regulation. Others worry that end-user revenues will lag too far behind massive capital spending and fast-growing debt. From an economic perspective, AI is pure momentum, generating huge profit gains, adding to investment spending, boosting upper-income consumer spending via a wealth effect and coinciding with very solid gains in productivity.

What Lies Beneath: An Updated Outlook on the Economy and Investing

Notes on the Week Ahead

Hello, and welcome to Notes on the Week Ahead, a J.P. Morgan Asset Management podcast that provides insights on the markets and the economy to help you stay informed in the week ahead. Hello, this is Dr. David Kelly. I'm Chief Strategist here at JPMorgan Asset Management. Today is August 10th, 2026.

The summer of 2026 has been dominated by the AI boom. Some fear that AI is advancing too fast for thoughtful regulation. Others worry that end-user revenues will lag too far behind massive capital spending and fast-growing debt. From an economic perspective, however, AI is pure momentum, generating huge profit gains, adding to investment spending, boosting upper-income consumer spending via a wealth effect, and coinciding with very strong gains in productivity.

That being said, beneath the AI economy, there is plenty of weakness, as was confirmed in last Friday's employment report. Job growth over the past year is barely positive, according to the payroll survey, and negative, according to the household survey. A collapse in net migration has contributed to a significant decline in the labour force. But even with this, year-over-year wage growth continues to slide, falling below CPI inflation we estimate for a fourth consecutive month in July.

Home building is stagnant, also victim to weak demographic demand and a shortage of construction workers. Employment at both the federal and state and local levels is down year-over-year, while exports, outside of tech, remain relatively soft. An updated view on the US economy requires an assessment of both of these broad trends, and begs the central question of whether the AI boom can lift the rest of the economy,

What Lies Beneath: An Updated Outlook on the Economy and Investing

Read the full transcript

The candid version is on a podcast,
not the earnings call.

What Lies Beneath: An Updated Outlook on the Economy and Investing

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.