US economic growth forecasts rise on AI investment and spending

Economists have raised their forecasts for United States economic growth in the third quarter, with GDP now expected to expand at an annualized rate of 2.5%, up from a previous estimate of 2%. This upward revision is attributed to increased consumer spending and significant private investment, particularly capital outlays directed toward artificial intelligence. Analysts suggest that AI-related capital expenditures could exceed $1 trillion this year and reach $1.5 trillion by 2027.

Complementing these growth projections, S&P Global reported that U.S. business activity surged in August to a 52-month high. This expansion was driven by a rebound in the services sector, which helped offset a slowdown in manufacturing.

Regarding monetary policy, economists anticipate the Federal Reserve will maintain current interest rates through July of next year, supported by moderating inflation data. However, risks remain, including potential supply shocks from geopolitical tensions in Iran that could impact oil prices and consumer costs.