AI capital spending is offsetting soft consumer spending — for now
Key takeaways
- A trader works on the floor of the New York Stock Exchange (NYSE) in New York on May 19, 2026.
- Normally, consumer spending is the main driver of economic growth, as it accounts for nearly 70 percent of aggregate demand.
- This pattern, moreover, is likely to continue for a while longer.
Why this matters: political developments that affect policy direction and public trust.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York on May 19, 2026. (Photo by TIMOTHY A. CLARY / AFP via Getty Images) Getting a clear read on the U.S. economy is challenging of late in large part due to the impact that the buildout of artificial intelligence is having.
Normally, consumer spending is the main driver of economic growth, as it accounts for nearly 70 percent of aggregate demand. In the first quarter of this year, however, its contribution to the economy s 2 percent growth was surpassed by business fixed investment. The latter surged by 10.4 percent and represented three quarters of overall economic growth, according to the Bureau of Economic Analysis.
This pattern, moreover, is likely to continue for a while longer. Wall Street analysts are upping their projections of AI-related infrastructure spending considerably as new data centers proliferate. Researchers at Morgan Stanley, for example, now project that capital spending for five hyperscalers — Amazon, Alphabet, Meta, Microsoft and Oracle — will top $800 billion this year and $1.1 trillion next year. The latter estimate is in line with other Wall Street firms and would exceed current U.S. spending on national defense.