Federal Reserve: AI-Related Investment Driving Strong Output Growth, Iran War Uncertainty Remains Key Risk

BlockBeats News, July 10th - The Federal Reserve's semiannual report revealed that the overall economic activity in the United States remained on a steady expansion path in 2026, primarily driven by high-tech investment and government spending. Factory output saw robust growth due to AI-related data center investments, leading to a continuous increase in production capacity.

However, the housing market faced a standstill, and external economic growth was sluggish due to the Middle East conflict and tariff drag. The labor market remained generally stable, with both wages and productivity increasing. Still, a slowdown in immigration resulted in a decrease in labor supply, leaving small businesses and households facing tight credit conditions.

Inflation remained high and continued to trend upwards in the spring, with asset prices above historical norms. The overall financial system remained sound, with banks holding ample reserve funds. While there was some redemption pressure in the private credit market, it continued to function normally. Long-term inflation expectations were primarily anchored around the 2% target, although the uncertainty brought by the Iran war remained a key risk.