Fitch Ratings, in its September Global Economic Outlook report, warned that a sharp correction in stock markets combined with a reduction in investments in artificial intelligence could plunge the US economy into recession and push global growth below 1% in 2027. In its scenario, Fitch modeled a 35% drop in US stocks, a 15% drop in non-US stocks, and an additional confidence shock affecting private investments in the US. According to the report, such a combination would lead to a 0.6% decline in US GDP in 2027 and global growth below 1%, which is close to stagnation or recession on a per capita basis.
Fitch notes that the current AI boom is providing significant support to the US economy through rapid growth in capital expenditures in the technology sector and indirectly through a rising stock market that supports consumer spending. However, some stock valuations appear to be significantly inflated, and future returns on AI investments remain uncertain. These factors create risks for economic growth if stock prices sharply correct or companies cut spending on technological infrastructure.
The consequences will not be limited to the US. Fitch estimates that growth in the Eurozone and China will be 0.8 percentage points below the baseline forecast in 2027.
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