Asset managers and the San Francisco Fed warn that a surge in AI capital
spending and equity wealth effects is lifting U.S. demand and making the Fed’s
job of cooling inflation harder. PIMCO says AI-related investment is relatively
insensitive to rate moves, so further Fed hikes may first depress real estate
and other traditional sectors rather than AI capex; it recommends more gradual
tightening to avoid disproportionate shocks to non-AI industries. The San
Francisco Fed sees AI infrastructure lifting tech-equipment demand and prices
but finds limited spillover of AI-driven price pressure to other sectors so far;
it notes long-run productivity gains could ease inflation even as short-term
capex raises prices. Goldman Sachs Asset Management estimates about $1trn of AI
capex plus government spending has lifted activity and cites a tracked U.S. Q3
GDP of ~3.4%; it says AI-related tech price rises are boosting goods inflation
and expects one more Fed hike this year, with further tightening into 2027 not
assured if inflation normalizes. Morgan Stanley flags strong data-center demand
but rising financing costs: since January the U.S. 5-year Treasury yield is up
over 100bps and data-center credit spreads have widened, increasing funding
headwinds for AI projects. BlackRock warns ROI and financing sustainability need
closer scrutiny and that higher energy and resource demand for AI infrastructure
could create new supply bottlenecks and inflationary pressure. Citi Wealth
Management and U.S. Bank say AI investment is extending into the real economy
and supporting corporate investment and consumption, but persistent inflation,
high rates and geopolitical risk keep conditions volatile; a sharp pullback in
AI capex would amplify slowdown risk as high rates squeeze financing.
