It’s not the Federal Reserve or tariffs; AI will be the most important macro variable in 2026.

Not the Federal Reserve, nor tariffs—Barclays has made it clear in its latest statement that artificial intelligence will be the most important macro factor in 2026, with an impact that will surpass traditional drivers such as monetary policy and trade policy.

On November 21, according to news from the Chase Wind Trading Desk, Barclays stated in its latest macro outlook report that as traditional macro drivers gradually retreat from the stage, AI has reached a "point of no return" and will continue to drive US economic growth and financial market performance.

According to Barclays analysts Ajay Rajadhyaksha and Amrut Nashikkar, AI has not only directly contributed nearly 1% to US GDP growth, but also supported consumption by boosting valuations of AI-related stocks and creating a wealth effect, becoming a dual engine for the US economy that offsets the negative impacts of weak employment growth and tariff shocks.

Meanwhile, the importance of traditional macro drivers will significantly decline. Most major central banks will remain on the sidelines for most of 2026; the European Central Bank has ended its rate hike cycle, the Bank of England is nearing the end, and the Bank of Japan has only one or two hikes left. The Federal Reserve is expected to cut rates three more times, but the appointment of a new chair is unlikely to trigger investor concerns about the Fed’s independence.

The report stresses that although the AI narrative may face challenges such as valuation, financing needs, and power constraints, these concerns are greatly exaggerated for the coming quarters. The bank forecasts that the US will grow by 2.1% in 2026, and global economic expansion will continue into the fourth year. However, if the AI narrative encounters significant setbacks in 2026, this would pose the biggest risk to the US and global economy.

AI has become a dual engine for US economic growth

Barclays' report shows that this year, America’s largest tech companies will invest about $400 billion in data centers, model training, and cloud infrastructure. Even more astonishing, McKinsey earlier estimated that by 2030, AI-related capital expenditure could reach an incredible $5-7 trillion.

The bank emphasizes, these numbers are not castles in the air. Meta CEO Mark Zuckerberg said in September 2025 that “misallocating tens of billions of dollars” would be “very unfortunate,” but insists the bigger risk is not investing enough or fast enough in AI. Google’s Larry Page was quoted as saying he would “rather go bankrupt than lose this race.”

Meanwhile, the report notes that OpenAI has signed agreements worth hundreds of billions of dollars with US tech giants including Nvidia, AMD, Microsoft, and Oracle. The company announced plans to invest $500 billion in its Stargate project to build AI data centers across the US in the coming years. Although OpenAI’s current revenue is less than $20 billion and it is expected to incur annual losses of tens of billions over the next few years, it holds ChatGPT—the global leading AI platform.

Barclays estimates that hyperscale cloud providers increased AI spending by 70% in 2025 and plan to grow another 30% next year. In 2025, nearly 1% of US GDP growth is estimated to come from AI investment, providing an important buffer for the American economy amidst trade wars.

Beyond the widely watched capital expenditure, AI’s role in supporting US consumption is little known. Barclays points out that by April, US household savings rates were extremely low. In comparison, in 2019—when unemployment was lower, inflation below 2%, and the Fed easing—savings rates averaged 6.5-7%.

The report states that after the tariff shock, the savings rate should have soared, which would have been a major blow to consumption. However, consumer spending did not fall significantly, averaging 1.5% growth in the first half and likely strengthening in the third quarter. The wealth effect played a key role, with the US stock market quickly rebounding and continuing to rise after the April shock. The Nasdaq is set to finish the year up 20%.

By rule of thumb, about 2.5-3% of the wealth created in the past 12-18 months will be converted to consumption in the following 12 months. Since the post-pandemic recovery, US household wealth has risen by over $55 trillion, with AI-focused stocks accounting for the bulk of stock market gains.

Traditional macro drivers will take a back seat

Barclays states that in 2026, the importance of tariffs and monetary policy will sharply decline.

On monetary policy, the bank believes that most major central banks will remain on hold next year: the ECB has finished its moves, the Bank of England is nearing the end, the Bank of Japan has at most one or two hikes left, and the Fed may cut rates three more times.

Barclays does not believe that appointment of a new chair will trigger concerns over the Fed’s independence, as the government’s shortlisted candidates (including Hassett, Waller, Rieder etc.) are all likely to be accepted by financial markets.

Most importantly, Barclays believes monetary policy in 2026 will not be mainly driven by political considerations, regardless of economic backdrop.

On tariffs, although some expect the Supreme Court to rule favorably on IEEPA-related tariffs, Barclays thinks such hopes are overblown—even if the Supreme Court rules IEEPA unconstitutional, the US would simply use sector-specific tariffs to reach similar levels.

Moreover, the market has already moved past the tariff issue, with smaller reactions to each headline, and major economies are currently well-adjusted.

Still, the report cautions that whether the labor market holds up is key. The report says employment growth has been very weak over recent quarters, with the three-month moving average at only 29,000.

Barclays believes the US labor market faces a severe supply-side shock. From 2022-2024, the migrant workforce added 2-2.5 million workers annually to the job market. With new immigration suddenly closed, this new supply has vanished.

Layoff announcements by major tech companies have sparked worries about AI-induced unemployment. In 2025, Amazon announced 30,000 layoffs, Microsoft 15,000, and Oracle 10,000. But Barclays is skeptical that AI will cause mass unemployment in this business cycle; core working-age labor force participation remains high.

If labor demand collapses, participation rates are expected to trend lower. The US economy has long been characterized as ‘no hiring, no firing’, and Barclays expects this to continue.

AI faces challenges, but outlook remains optimistic

The report states that although issues such as valuation, financing needs, and power constraints are worrisome, these concerns are greatly exaggerated for the coming few quarters.

Regarding power demand, Barclays estimates that $3-4 trillion in AI spending equates to 70-95 GW in electric power need. The US Department of Energy believes data centers currently account for 4.4% of total power demand, but this is set to multiply in the next few years.

However, Barclays believes that at least in 2026 and 2027, power will not be a severe constraint on capital expenditure.

On financing, publicly listed hyperscale companies possess strong balance sheets and generate substantial cash flow. Some estimates suggest that in coming years, only about half of AI capital expenditure will be covered by free cash flow; the rest must come from capital markets.

Nevertheless, these concerns must be balanced against real computing and inference needs.

Google recently pointed out that it expects a tight supply-demand environment in 2026, with strong cloud customer demand.Microsoft stated that computing power demand exceeds supply for all workloads, and expects capacity to remain constrained at least through end-2026, aiming to double data center capacity within two years.Meta noted that its computing power needs continue to expand “significantly,” with Amazon expressing similar views.

Barclays believes that at least for the next few quarters, a sudden mismatch in supply and demand (like the post-dotcom bubble, when demand slowed but new supply came online) is extremely unlikely.

AI has already brought efficiency gains and revenue growth to the tech sector, and the AI narrative’s impact on capex and valuation will remain intact. This is a truly game-changing technology poised to reshape the global economy in the years ahead.

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The above brilliant content comes from Chase Wind Trading Desk.

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