AI is helping, but consumers still drive US growth

US growth is more dependent on a potentially vulnerable consumer than on AI investment, creating downside risk to consensus spending forecasts.

• Consumption represents 68% of US GDP and has grown consistently in real terms by 2–3% in recent years.
• The income support behind strong consumption in 2023 and 2024 has weakened as employment growth slowed, wage growth moderated and inflation remained sticky.
• Tax cuts provided some support earlier in 2026, but that boost is fading, while maintaining spending growth may have required households to reduce their saving rate.
• A Federal Reserve paper finds that the sensitivity of aggregate consumption to stock-market changes has tripled since 1990; a 25% fall in US equities could contract consumer spending before accounting for weaker employment and wages.
• The consumer is bifurcated: high-income households are sustaining overall spending, while lower-income groups struggle with living costs, and a slowdown in AI investment could weaken business investment, earnings expectations, equity prices and consumption through a larger wealth effect.

Takeaway: Investors should not assume that robust US consumption will continue without stronger employment or lower inflation, and should treat equity-market and AI-investment risks as potential amplifiers of an economic slowdown.