Key insights
- Wolfe Research indicates the US economy is experiencing robust growth, estimated at 3% real GDP, driven by AI development, wealth effects from record equity highs, and substantial housing wealth gains since COVID. The ISM Manufacturing survey's New Orders component signals early economic acceleration. These factors, particularly the wealth effect benefiting higher-income households who own the majority of equities and housing, suggest continued consumer spending and positive momentum for the US economy and equity markets.
Investing.com -- The U.S. economy is maintaining solid momentum with real-time indicators pointing to approximately 3% real growth, according to Wolfe Research. The firm attributes this performance to an AI buildout contributing up to 40% to GDP, alongside wealth effects and tax stimulus measures.
The May ISM Manufacturing survey showed expansion for the fifth consecutive month on Monday. The New Orders component, which Wolfe uses in its six-month moving average for its U.S. Market Cycle Framework, continued to signal Early Acceleration.
Wolfe emphasized the significance of the wealth effect on consumer spending, noting that markets are at all-time highs with spending supported by upper-income consumers. The top 40% of U.S. earners own 94% of equities, according to the firm's analysis.
The research firm also pointed to $16 trillion in housing wealth added since COVID as another source of spending capacity for higher-income households, with the top 40% of earners owning approximately 75% of housing wealth.