UBS economist Jonathan Pingle stated in a note on Tuesday that “despite the headline resilience, sources of growth are narrow. The outlook is heavily reliant on AI.”
“Investment is concentrated in tech, and the stock market’s boost to upper-income household spending,” he added. “The entire rest of the economy looks weak or is in contraction.”
Rising energy prices and ongoing tariff headwinds are seen as additional risks to real income, while fiscal measures like the One Big Beautiful Bill Act (OBBBA) and interest rate cuts are expected to provide some support.
UBS forecasts two rate cuts in 2026, leaving the Fed funds target range at 3.00%–3.25% by year-end, though risks are skewed toward just one cut.
“The FOMC is in a tough spot with PCE inflation near 3%. A new Board Chair adds uncertainty,” the bank said.
Pingle stressed the importance of maintaining AI momentum, warning that if investment or equity support falters, “the expansion itself would be at risk.”
UBS expects the economy to go through a period of adjustment before accelerating, noting, “We are bullish longer term and estimate that we are on the cusp of an acceleration in structural growth.”
source https://www.investing.com/news/economy-news/us-economy-on-the-cusp-of-aidriven-acceleration-ubs-4552656
