Wednesday Wisdom 8/5
Midweek reads full of fun facts to contemplate on AI, the World Cup bump, burgers and snow cones
Hello Readers,
This week, I’m writing from a busy week in Bloomington, as you’ll see in One Last Thing. But first, let’s dig into U.S. economic growth at midyear.
Big News
The U.S. economy expanded at a 1.5 percent annual pace in the second quarter, as measured by real gross domestic product (GDP). Growth is down from the first quarter of 2026 and from the second quarter of last year.
Quarterly contributions. Consumer spending, tech-related business investment (AI), and government spending where the primary contributors to growth. Housing (or residential investment) and non-tech business investment added to growth for the first time since 2024. Trade, inventories, and government spending were a drag on growth for the quarter.
Consumer spending. Thanks to spending on hotels, restaurants, and pharmaceuticals, consumer spending had its strongest growth in nearly a year. The start of summer travel and the World Cup likely supported the boost to hotel and restaurant spending. On a year-over-year basis, however, consumer spending slowed to 2.3 percent, from 2.7 percent over the year ending in June 2025.
Business investment. To capture the impact of AI investment, I split business investment into its tech and non-tech components. Tech-related investment growth slowed in the second quarter, but the sector still leads annual growth, at 14.1 percent year-over-year. For comparison, non-tech business investment has contracted by 1.7 percent over the year ending in June 2026.
Residential investment. Growth in housing investment during the second quarter is welcome relief from five consecutive quarters of decline. Despite this improvement, high home prices and mortgage rates have reduced residential investment by 3.9 percent on a year-over-year basis.
So what? Economic growth remains concentrated in AI investment. The leading sector for the quarter was consumer spending but had an assist from the World Cup. Without broader growth across sectors, job gains will remain limited.
Related Fun Facts Reads:
Reads Around the Web
OK, Well, Rogue AI Agents Are Hacking Again, by Paresh Dave and Brian Barrett, WIRED, August 4, 2026: ”So far, the AI models have caused limited damage beyond allegedly violating some services’ terms of use and pointing to security lapses… the incidents have underscored the capabilities of AI models to find vulnerabilities across the internet and the dangers that await if they are allowed to operate with few restrictions… As the leading AI companies compete to build more powerful models and land customers, it’s unclear when the breaches may stop.”
The Big Mac Index at 40, The Economist, July 30, 2026: ”Currencies are once again moving out of whack. According to the Big Mac index, the world price of burgers… moved closer to the American price in the first decade of this century. But since 2010 it has once again diverged… American inflation after 2021 is one culprit. The growing prominence of an undervalued Chinese yuan is another. A third contributor is the plunging yen. Incredibly, it is now about 20% cheaper to buy a Big Mac in Japan than in China.”
Warsh Raises Rethink on Fed’s Policy Meeting Frequency, Timing, by Enda Curran, Bloomberg, August 2, 2026: “One idea Warsh floated is for Fed policymakers to meet six times a year to decide on interest rates and other monetary policy issues… The 12-member FOMC currently meets eight times a year in Washington to set interest rates, a practice it has followed since the early 1980s. A reduction in the number of policy meetings would mark a significant shift in the way the central bank operates.” (🎁link)
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Reads on Substack
“We remember when people tried to sell us something instead of selling us.”
“Warsh’s remarks on Wednesday led the market to distrust his commitment to fighting inflation.”
“I talk to people who bemoan paying their taxes because they don’t get to designate what the money is for.”
One Last Thing…
Sara’s Fun Facts Schedule
🦉 8/12 Wednesday Wisdom: July Jobs
🌆 8/14 SRR Real Estate Quarterly: Q2 2026
😎 8/19 Sara Takes a Vacay: No Wednesday Wisdom
🦉 8/26 Wednesday Wisdom: July Inflation
“Be loud for America.” — Governor JB Pritzker
“The most revolutionary thing one can do is always to proclaim loudly what is happening.” — Rosa Luxemburg
Cheers! - Sara 🦉