AI Boom Fuels Surge in U.S. Capital Goods Orders

New orders for U.S.-manufactured capital goods experienced a notable upsurge in December, exceeding expectations, with shipments also on the rise. The surge, largely attributed to an AI investment boom, suggests robust business spending and promising economic growth prospects for 2026, according to the Commerce Department.

Stephen Stanley, a chief economist at Santander U.S. Capital Markets, noted that while the AI craze bolstered early-year business spending, other sectors began to rebound by year-end, setting a positive tone for investment in 2026. This optimistic outlook supports expectations of above-average economic performance in the coming years.

Simultaneously, the housing market presented varied results, with a rise in single-family housing starts despite ongoing material cost challenges. The Trump administration's measures to enhance housing affordability face hurdles, with elevated U.S. Treasury yields impacting mortgage rates and necessitating increased housing supply to combat affordability issues.