US economic growth outpaces G7 peers amid artificial intelligence boom

The US economy is projected to grow much faster than all other major advanced economies this year, as its domestic policies trigger difficulties across much of the globe.

According to Axios, the global economy has proved surprisingly resilient in the face of successive shocks.

The US stands out within this broader picture. A boom in artificial intelligence investment is helping the country expand far more rapidly than peer economies.

Yet this exceptional performance carries a price: more persistent inflation and interest rates that may need to stay at elevated levels for longer to rein it in.

The Organisation for Economic Co-operation and Development (OECD) projects that the US economy will expand by 2.2% this year.

That rate is roughly double the pace forecast for the eurozone, Germany, and the United Kingdom. Growth is expected to be even weaker in Japan (0.8%) and Canada (0.9%).

This growth gap is expected to persist next year. In 2027, US growth is projected to reach 2.1%, while growth across most other major advanced economies in the rest of the world is forecast to hover around 1%.

The OECD has grown more optimistic regarding the US since June, raising its growth forecast by 0.2 percentage points for 2026 and by 0.3 percentage points for 2027.

This trend contrasts with downward revisions to next year’s growth projections for the global economy overall, the eurozone, Canada, the United Kingdom, and Japan.

OECD Chief Economist Stefano Scarpetta told reporters this morning:

“The biggest risk remains the course of the conflict in the Middle East and its impact on the energy market. But there are a number of other risks, some of which appear to have become somewhat more pronounced compared to the June forecasts.”

Scarpetta highlighted rising government bond yields, the risks accompanying the AI investment boom, and the likelihood of extreme weather pushing up food prices.

According to the OECD, the boom in artificial intelligence (AI) has provided the US economy with a powerful shock absorber absent in most other economies.

Rapid growth in AI investment and manufacturing “partially offset” the economic blow dealt by the conflict in the Middle East.

Data centre and technology spending directly bolstered US growth.

The inflation outlook, meanwhile, is proving more stubborn than it appeared several months ago.

The OECD expects headline inflation in the US to fall from 3.6% this year to 2.6% next year.

However, this forecast for 2027 is half a percentage point higher than the figure projected in June.

Core inflation in the US is projected to stand at 3.3% this year, among the highest rates across leading advanced economies, before easing to 2.5% next year.

This stubborn path explains why the OECD expects the Federal Reserve to deliver one more interest-rate increase this year and anticipates rates will remain in the 4% to 4.25% range through the end of 2027.

On the other hand, the AI boom accelerating US growth is beginning to bring its own macroeconomic headwinds.

According to the OECD, long-term borrowing costs in most of these major economies are at their highest levels in at least 15 years.

The organisation argues that heavy borrowing by AI firms has contributed to pushing yields higher, which could elevate costs across the broader economy and leave markets vulnerable if AI profits fail to meet expectations.

America has contributed to making the global economic climate more challenging.

Even though its own economy has so far performed better than nearly all other countries, this resilience comes accompanied by an inflation problem that remains difficult to eliminate.