Argus

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Jun 16, 2026

Market Outlook

Bullish

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Short

Summary

We are raising our 2026 gross domestic product (GDP) growth forecast to 2.3% from 2.1%, our 2Q26 estimate to 2.5% from 2.2%, and our 2027 growth forecast to 2.4% from 2.0%. The major change to our estimates is that indicators point to even stronger Gross Domestic Investment (GDI) even as inflation constrains consumer spending. Companies see an opportunity to raise productivity and their return on capital and artificial intelligence (AI) dominates the increase in investment. The investment dollars then boost the Equipment and Intellectual property categories in the GDP report. Nvidia CFO Colette Kress recently estimated that AI infrastructure spending is on track to reach $3-$4 trillion annually by the end of this decade. We also have increased our estimate of imports, which reflects purchases of gear to support the AI buildout. As a reminder, GDP is the value of goods and services produced in the U.S. Imports are subtracted from GDP. We did not make major changes to our outlook for consumer spending. Consumers are proving to be more resilient than we expected with gasoline selling for more than $4.00 per gallon. On the positive side, bigger tax returns helped, unemployment continues to be low at 4.3%, and hiring has improved (with payroll gains averaging a healthy 188,000 over the last three months). Household net worth is also up 8% from a year ago. But inflation is playing Scrooge, rising faster than wages. The Consumer Price Index was up 4.2% in May. Average hourly earnings were up just 3.4% in May. Real Disposable

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