Economic Outlook for 2026 - S&P Global Ratings expects AI tailwinds to boost otherwise weak growth in the US [1] - US growth is projected at 2%, potentially driven by AI and data centers, along with lower energy prices and easy financial conditions [2] - AI is estimated to contribute at least 0.5 percentage points to annual US growth [2] - Approximately 80% of domestic spending in the first part of the year was related to AI and data centers [2] Challenges and Risks - Manufacturing sector is experiencing contraction, with tariffs not resulting in the anticipated reshoring [2] - The US economy exhibits a narrowness in labor market strength, demand, manufacturing, and consumer spending [4] - Top 10% of Americans account for roughly 40-50% of spending, indicating a lack of broad-based recovery [5] - Rising electricity demand, driven by data centers, is pushing up utility prices for local communities [7][8] Global Implications - Europe and parts of Asia are benefiting from digital infrastructure build-out in the US, particularly in Ireland, Taiwan, Malaysia, and South Korea [9] - Europe's growth could reach 125% to 150% with the release of the German debt break, focusing on infrastructure and defense [11] - China faces challenges due to a property overhang, despite being a leader in clean tech, with growth around 4-45% [11] - Emerging Markets (EM) are benefiting from lower energy and gasoline prices, which constitute a significant portion of their consumption basket [12] AI and Labor Force Transformation - AI's initial impact on the labor force is expected to be negative, with potential layoffs in the tech sector [13] - The long-term aspiration is for AI to drive new technologies, productivity, and a labor renaissance [13]