IIF Global Macro Views: How AI Valuations Reach the U.S. Consumer

About this work

Marcello Estevão and Jonathan Fortun examine how elevated AI valuations transmit to U.S. household spending and what that means for growth. They find that AI lifts the economy through investment and, apparently, through stock market wealth, which raises exposure to a shared reversal. Consumption is running ahead of labor income as saving declines, with wealthier asset holders likely providing more of the marginal support. Ten AI linked firms explain roughly half of the gain in S&P 500 market capitalization since the end of 2022. A joint 20% fall in investment and equities could reduce GDP by 1.1% to 1.7% before wider spillovers.