The chief global strategist at JPMorgan Chase is issuing a contrarian call about AI and the US economy.
In a new CNBC interview, David Kelly predicts that inflation will be lower by the end of the year, believing that oil and tariff issues will be temporary.
But the strategist also says that the US is only capable of having a “tortoise economy,” which refers to a stagnant or barely growing economy.
“But by the end of the year, if we’re right in oil, and you’ve got lower tariffs in the fourth quarter this year than last year, and you’ve got falling shelter costs, which we’re seeing also, all that tells me 2% by the end of the year on CPI, and I actually think below 2% next year. In fact, next year I think we’re going to be below 2% on both growth and inflation…
Because I think that this is a temporary oil issue, and I think it’s a temporary tariff issue. And the end game here is that this economy is really only capable of growing about 1.5% long term. So I think both of these things, both the tariffs and the oil, are going to fade over the course of the year, and we’re going to just slow down as we go into 2027.”
Kelly explains that America’s aging population is the main reason for his dovish outlook. He highlights that the country’s working-age population is declining every month, and the country now has to rely on AI to do the heavy lifting for the economy.
“But the thing is, it has to be all AI productivity boom because of what’s going on. The working-age population is now shrinking by about 20,000 people per month. That means that all the economic growth is essentially going to have to come from AI productivity. And the productivity numbers are good. I think they will be good from AI. But there’s only so much you can hope that it can do.”
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