Big spending among upper income earners, and ongoing low unemployment rates, are two factors that are expected to contribute to a resilient U.S. economy in 2026, says a new report.
Issued by the Royal Bank of Canada, the report foresees what it calls a “stagflation lite scenario” for next year, with growth coming in below the 2% rate and inflation remaining “uncomfortably high.”
The report, Five Themes for US Economy in 2026, also paints a complex picture of the role that artificial intelligence will continue to play in the economy. Yes, data center investment has more than doubled in the last four years, comprising a remarkable 25% of all investments as of the end of last year.
In fact, AI has been a “growth driver, contributing as much to Gross Domestic Product growth as consumption in recent quarters.”
But economic activity surrounding AI has thus far been pretty much all about investment. To date, there has been little evidence of a “significant productivity boom yet – the true dividend that will determine the return on investment.”
Economic growth as measured by consumer spending, meanwhile, appears to largely be coming from those who have plenty of money. In looking at sentiment surveys, the report remarks: “All households have an equal vote, suggesting that most households feel concerned about the economy.”
On the other hand, hard data suggests that the “top 10% of households are responsible for a near majority of consumer spending.”
Income in that top 10% category, which is also largely populated by the Baby Boom generation, is shifting from money made working at a job, and more to money coming from “dividends, interest, and rent.”
At the same time, even though middle-income earners can almost certainly be expected to “feel the pinch of inflation,” it is expected that “this group should continue to spend as long as they have jobs.”
December 9, 2025
By Garry Boulard
