Vanguard forecasts US growth of 2.25% in 2026 on AI investment

A report published on the Department of International Trade Promotion (DITP) website, citing the Office of Commercial Affairs (OCA) in Chicago, United States, under Thailand’s Ministry of Commerce, said Vanguard expects the US economy to expand strongly in 2026, powered by business investment in artificial intelligence (AI), while inflation remains elevated and limits the Federal Reserve’s room to cut interest rates.

According to the Vanguard Economic and Market Outlook 2026, prepared by Vanguard Group, Inc., US GDP growth in 2026 is forecast at about 2.25%, above potential, with capital expenditure expected to remain the key engine supporting economic resilience.

The report said overall investment over the past year has risen to more than twice its historical average, despite global economic uncertainty.

Vanguard said accelerated AI investment, covering data centres, digital infrastructure and advanced software, has become a new pillar of the US economy since 2025 and will continue to stand out in 2026.

Over the next 12 months, AI-related investment is expected to inject around US$450 billion into the US economy and support nonresidential investment growth of up to 7%, it said.

On trade policy, Vanguard warned that US tariff measures and shifts in trade direction could create stagflationary pressure, though the impact is expected to be limited.

It cited firms’ front-loading of imports and the gradual pass-through of costs to consumers, which could push part of the inflation pressure into 2026.

Moderate fiscal support and still-strong investment momentum were also expected to help cushion the downside.

The report noted a significant slowdown in hiring, from an average of about 150,000 jobs per month to around 30,000 most recently.

However, Vanguard said the labour market remains resilient, with more than 70% of the slowdown stemming from structural factors such as demographic change and migration dynamics, which have slowed labour-supply growth and reduced the need for new hiring.

It estimated the US needs around 60,000 new jobs per month to keep unemployment steady, and projected the jobless rate edging up to 4.2% by the end of 2026.

On inflation, Vanguard said core inflation is likely to remain relatively high, with a chance of staying above 2.5% due to tariff pass-through and stronger demand linked to investment.

This would leave the Fed with limited room to ease policy, and Vanguard expects only one rate cut in the first half of 2026, with the policy rate ending the year near 3.5%, around a neutral level for the economy.

The OCA in Chicago said the US in 2026 remains a high-potential market for Thai businesses, particularly those able to align with investment and technology trends, upgrade production standards, strengthen sustainability performance in the environmental, social and governance (ESG) factors, and adapt to trade policy shifts.

It urged Thai exporters to closely monitor US trade and tariff policy, consider adjusting pricing structures, diversify markets, and use faster deliveries or inventory management to cope with potentially higher costs.

The office also said building business partnerships with US companies could help Thai firms gain better access to technology, markets and distribution networks.

It added that with the Fed expected to cut rates in 2026, the US dollar could strengthen, while slower labour-market growth driven by structural factors may make consumers more cautious.

As a result, consumer goods should emphasise value for money, mid-range pricing and affordability, it said.