Weekly Economic Report 5.29.26

There was a deluge of data this week, but the main take away was that corporate America is on a capital spending binge which makes it hard to see a slowdown in the real economy any time soon – even if employees are being squeezed between higher prices and weaker wage growth. Indeed, it is that margin spread that is supporting business profits, and their investment in artificial intelligence – which the bosses see as the new source of output growth and greater profits through productivity enhancement by replacing labor. At this point, it does not matter whether they are right or not – they have the funding, and they will invest. Indeed, with double growth rates in profits, neither interest rates, nor inflation, nor rising wages present even a speed bump to their plans. Moreover, with the One Big Beautiful Bill providing immediate expensing for domestic capital spending, the incentive is to go, go, go before it is taken away.

EU05-29-2026.pdf

Download PDF • 234KB