Can the AI boom continue to prop up the US economy? Moody's Analytics' top economist Mark Zandi isn't so sure.
Zandi has raised a lot of red flags this year over what he sees as waning economic strength in the face of strengthening headwinds. In a post this week, he said that the US may still avoid a recession in the coming year, but only if everything goes exactly right.
The major risk he sees is that the boost to the economy provided by the AI boom will be diminished by another global megatrend: deglobalization.
"Whether the economy grows and successfully navigates the crosswinds of deglobalization and AI depends on nothing going off script," he said. "Of course, when it comes to the tariffs, a lot could."
Zandi has raised concerns that Trump's trade policies could accelerate America's descent into a recession. Now he sees deglobalization as a growing threat to economic progress, as tariffs and restrictive immigration policies elevate costs and put pressure on the labor market.
AI has contributed 0.63 percentage points to GDP growth this year, and without it, the US economy would likely be in a recession, Zandi said. However, deglobalization will weigh on further expansion next year.
"Deglobalization will remain a significant drag in 2026, reducing real GDP growth by 1.19 percentage points," the economist added.
He went on to note that the ultimate benefits of AI also might not be felt for some time, citing other examples of "pathbreaking technologies" that only contributed to growth once they were more fully integrated into businesses.
Additionally, Zandi raised concerns that the benefits of AI are largely confined to the already wealthy, which could limit its contributions to overall economic growth, even if the AI boom continues to drive up stock prices.
"Our already highly skewed income and wealth distribution will become even more so," he predicted. "The economic and political struggle between the haves and have-nots will intensify, to everyone's detriment."
Zandi added that the macroeconomic fallout from the US government shutdown could also push the economy off script, even as the government prepares to reopen this week.
