Citrini Research
· Citrini Research
· January 14, 2026 at 01:09
· ⏱ 7 min read
| Read on Substack ↗
Summary
The US economy is reaccelerating due to AI-driven productivity gains, pro-growth policy ahead of midterms, and Fed liquidity injections, even as the labor market weakens. This supports continued GDP growth and rising corporate earnings, which should buoy the stock market, though unemployment may remain elevated.
•US real GDP expanded at annualized rates of 3.8% in Q2 and 4.3% in Q3, with the Atlanta Fed GDPNow model forecasting Q4 growth of 5.1%.
•Net job creation has slowed to a standstill for much of 2025, with hire/quit rates below pre-COVID norms and layoff rates creeping upward.
•AI productivity gains, particularly from coding agents and 'vibe coding,' are driving GDP expansion despite stagnant labor input, with hundreds of billions invested in productivity-enhancing technology.
•The Fed has shifted from base-money destruction to creation via a new liquidity program, alleviating funding market stress that emerged in late 2025.
•Political pressure from midterm elections is leading to pro-growth policies including oil supply support, MBS buying for housing affordability, interest rate caps, and potential stimulus checks.
•Historical parallels (1992, 1975, 1958) show that rising unemployment alongside GDP growth and a rising stock market is possible, similar to post-WW2 productivity boom.