Solid growth and cooling inflation: 3 calls for the US

US growth should remain solid while inflation cools, but an Iran conflict or a rapid AI productivity boom could produce sharply different outcomes.

• ING expects US growth of 2-2.5% over the next couple of years, supported by wealth gains among higher-income households while weaker wage growth pressures middle- and lower-income households.
• Technology-related capital expenditure remains strong, but it is diverting investment from other areas and contributing to a low-hire, low-fire economy.
• Wage growth is expected to fall to 3%, allowing one further Federal Reserve rate increase in December before a long pause through most of 2027.
• The adverse scenario combines regime-change efforts in Iran, higher energy prices, tariffs and inflation that could push the Fed above 5%, followed by recession and aggressive easing after the shock fades.
• The optimistic scenario sees AI productivity gains lift US growth to 5% in 2027, compared with 2.7% annual growth since ChatGPT launched, while mortgage rates fall below 4% and residential property recovers.

Takeaway: The base case supports one further rate hike and a prolonged pause, while portfolio risks are concentrated in an Iran-driven inflation shock and the upside potential from faster AI adoption.