LIVE MARKETS-From election heat to AI hype, ING maps US growth path

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FROM ELECTION HEAT TO AI HYPE, ING MAPS US GROWTH PATH

Tariff dividend payments, looming elections and worries about what would happen if the AI bubble bursts are elements considered by ING’s Chief U.S. International Economist James Knightley as he estimates the prospects for U.S. growth in 2026. Knightley remains broadly upbeat about growth, citing looser financial conditions, U.S. President Donald Trump’s willingness to make tariff concessions as well as his proposed “tariff dividend” payments that could benefit lower-income households.

With all house seats and 35 Senate seats up for grabs during November’s midterm elections, ING says it could mean a bigger push from Trump for the $2000 ‘tariff dividend’ for lower income households and increased interference over monetary policy.

Knightley expects high-income households and the tech sector to be the main growth drivers for the first half of the year and AI investment - which has played a big role in the economy through 2025 - to continue to contribute in 2026.

However, a question floated during Friday’s outlook call about the biggest risk in 2026 had 26% of the audience pressing the ‘AI bubble bursting’ option in live polling.

ING analysts wrote in a note that an AI bubble burst “would be a major problem for the US economy.” While they say fears of recession sans AI investment may be overdone, AI’s importance cannot be understated.

They estimate that the top 20% earners own 71% of the wealth and so, with AI valuations surging, these richer consumers have kept up with spending while other households have come under pressure. So a popped bubble would mean a key driver of growth would suffer.

(Twesha Dikshit)

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