The Fed is likely moving to cut rates even as the economy looks strong on paper. Q2 GDP was revised up to 3.3%, the fastest in nearly two years, driven by consumer spending and a surge in investment tied to the AI build-out. JPMorgan estimates data center spending added about 0.1–0.3% to growth last year and could add another 0.1–0.2% each year through 2026.
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A key shift is in non-residential investment — spending on structures, equipment, and technology rather than housing. It now makes up over 7% of total fixed investment, compared to just 3–4% before 2023. That doubling reflects the scale of the AI race: data centers alone are approaching 1% of GDP, putting them on par with some of the largest industrial booms of past decades.
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Markets are reacting on both sides: utilities are up 9% in six months as investors bet lower rates will boost steady dividend payers, while gold has climbed 21% as a hedge against the risk that cutting rates into strength reignites inflation, reducing the value of the dollar.

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