Quick Hit: Durably Broad-Based US Growth

With America’s Q2 gross domestic product (GDP, a government-produced measure of economic output) report due on Thursday, we have seen financial headlines question the US economy’s health—worthwhile for globally minded investors to consider given America’s large share of the global economy.^[i] We have seen some commentators argue unsustainable artificial intelligence-related (AI) investment alone props up growth. But focussing on AI overlooks a better-than-appreciated economic backdrop, in our view. June’s durable goods report, whilst a limited view, is further evidence of the US economy’s broad-based growth, which we think is an underappreciated positive underpinning the expansion and bull market.

America’s Census Bureau announced new orders for manufactured durable goods—items meant to last three years or more—rose 0.3% m/m in June.^[ii] Since today’s orders represent tomorrow’s production, we (and others) follow these data closely. Core capital goods orders in particular receive close scrutiny since they represent equipment investment, a key part of US GDP’s business investment category.^[iii] This subset of orders—which excludes defence (mostly government demand) and transportation (volatile due to the aircraft industry’s lumpy ordering schedule)—rose 0.9% m/m after May’s 1.9%.^[iv]

Financial coverage we read highlighted the 3.1% m/m rise in computer & electronic products orders, attributing this to AI- and AI-adjacent spending.^[v] Many onlookers we follow implied this supports the notion AI is driving all business spending, which could be problematic if demand dries up.^[vi]

But whilst AI is important, our review of the data suggests US economic growth isn’t just an AI-spending story—and it never has been. Yes, orders for computer & electronic products rose last month. But so did orders for primary metals and electrical equipment, appliances & components.^[vii] Machinery orders did dip (-0.1% m/m) last month—its first monthly contraction in 16 months—which illustrates a broader point: Demand for US durable goods has steadily grown for a while now.^[viii] (Exhibit 1)

Exhibit 1: Durable Goods Industries New Orders Since July 2025

Source: FactSet, as of 28/7/2026. New orders for major durable goods industries in billions of US dollars, July 2025 – June 2026. Indexed to 100 on July 2025.

Transportation orders are an outlier because of their aforementioned volatility, as the airline industry tends to make orders for hugely expensive expenditures in clumps, with air shows a big factor.^[ix] There is also a caveat, of course: These data aren’t inflation-adjusted, so the values may reflect higher prices rather than order volumes to a degree. Yet overall, orders across all major industries have expanded over the past 12 months. We agree some of that growth reflects the AI buildout, but we think it also speaks to demand for day-to-day items, from air conditioners and microwaves to auto parts and mini ovens. To us, this isn’t a case of just one category carrying growth whilst everything else sags.

Whilst durable goods orders are forward-looking, they capture a limited segment of US output—namely, the equipment segment of nonresidential investment (i.e., business investment). Based on 2025 nominal GDP (which reflect current prices, not adjusted for inflation), equipment spending comprised around 39% of business spending, well ahead of structures (21%) and a tad behind intellectual property products’ (which includes software and research & development) 40%.^[x] Taking a step back, equipment investment was just 5.3% of 2025 US nominal GDP—paling in comparison to consumer spending’s 70%.^[xi]

Yet our research shows consumer spending is rarely the economic swing factor defining cyclical shifts—business investment is. According to our historical observations, an extended stretch of falling capital goods orders may signal businesses are tightening their belts after overextending themselves, taking less risk and funneling less new capital into the economy. We find this is often consistent with the onset of recession (a prolonged economic downturn). That isn’t the case today, in our view. Capital is still flowing via lending and corporate bond markets, and businesses are merrily deploying it.^[xii]

Tech and tech-adjacent spending garners the most attention in financial coverage we track, overshadowing other expanding segments of the US economy. That underappreciated, broad-based growth suggests the US economy remains on firm footing—a reason we remain bullish on global stock markets today.