United States: Broad-based Q2 GDP strength beyond AI – TD Securities

TD Securities economists Eli Nir and Oscar Munoz highlight that Q2 United States (US) Gross Domestic Product (GDP) growth slowed to 1.5% q/q AR, but underlying private domestic final purchases accelerated to 3.9%. They stress that AI (Artificial intelligence)-related activity remains a large share of the economy, yet growth outside AI sectors was strong. They argue this broader momentum suggests policy may not be highly restrictive.

Underlying momentum extends beyond AI

"Headline Q2 GDP growth moderated to 1.5% q/q AR, but underlying activity (private domestic final purchases) accelerated to a strong 3.9%."

"The percent of GDP that comes from AI-related activity remains high, but growth outside those sectors was strong in Q2."

"AI-related activity remains a large share of the economy, but robust Q2 growth beyond the AI sector showed encouraging signs of healthier, more broad-based economic momentum."

"Robust activity is also another sign that policy may not be that restrictive."