Yardeni Research says recent indicators suggest the artificial intelligence wave is moving past large technology companies and into the broader U.S. economic landscape, supporting hiring, new business formation and capital spending even as geopolitical tensions and inflation remain headwinds.
In a string of data points the firm highlighted, labor-market metrics provided one of the clearest signs that AI is operating as a growth tailwind rather than producing the widespread labor displacement some investors feared. Job openings climbed to 7.62 million in April, the highest level since May 2024 and the largest monthly increase since 2020. That level of openings now roughly equals the number of unemployed workers, an alignment Yardeni views as evidence of robust labor demand.
Small businesses appear to be a notable part of the story. Yardeni noted a 69% month-over-month increase in job openings at firms with one to nine employees, and a 64% surge in openings within professional and business services. The firm suggested these shifts could reflect the emergence of new enterprises that are AI-driven or are expanding through business-application adoption, supporting both hiring and business formation trends.
Industrial activity has also shown improvement. The Institute for Supply Management manufacturing purchasing managers index rose to 54.0 in May, its strongest reading since 2022, with both new orders and production remaining in expansion territory. Those readings point to continued strength in manufacturing output despite ongoing uncertainty.
At the same time, inflationary pressures remain a complicating factor. The ISM prices-paid index held at 82.1 in May, indicating that businesses are still encountering rising input costs that could influence the Federal Reserve's policy decisions and corporate margin dynamics.
Construction spending provides another window into AI-related investment. Total construction spending increased for a second consecutive month in April, driven in part by rapid growth in data-center development as companies expand computing infrastructure to support AI workloads. Yardeni identified that buildout as a key channel through which AI spending is translating into real-economy activity.
Consumer demand has, so far, remained resilient amid these shifts. The Redbook same-store retail sales index reached its highest level since late 2022, and the Atlanta Fed's GDPNow model continues to point to solid second-quarter growth, even after a recent downward revision. Those measures suggest consumption is holding up as the inputs of AI-driven investment and hiring play out.
Despite these supportive signals, Yardeni emphasized caution about the near-term market outlook. The firm called out ongoing Middle East tensions, the possibility of higher oil prices, the risk of additional Federal Reserve tightening and several large, upcoming initial public offerings as factors that could increase market volatility in the weeks ahead.
Overall, Yardeni’s view frames AI adoption as an accelerant for certain pockets of economic activity - from small-business hiring to data-center construction and manufacturing orders - while warning that input-cost inflation and geopolitical shocks could temper the pace and stability of that expansion.