Bill Conerly

Summary The Index of Consumer Sentiment has been published by the University of Michigan since 1952, but has never been as low as the May 2026 level.

Real estate professionals recently asked me if we would get back to a “normal” housing market.

The surge in billionaires, like Elon Musk, to a record number reflects a dynamic economy. While the top 0.1% hold more wealth, the overall economic pie has expanded, benefiting the bottom 50% too. Innovators drive much of this, creating vast societal value while capturing only a small share, alongside financiers who boost market efficiency. Entertainers have neutral impact; heirs' investments are productive. Philanthropy's economic benefit is unclear without market testing. Only "parasite" billionaires, exploiting political connections, harm the economy. Overall, the rise of innovator billionaires signals positive economic dynamism and progress, if crony capitalism is prevented.

$14 trillion in foreign investment pushed U.S. stocks past GDP growth, as emerging economies poured money into American markets

The economic impact of artificial intelligence is multifaceted, requiring close monitoring of several key areas. While AI has shown little immediate effect on aggregate employment and wages, significant initial investments in training and process restructuring are crucial for realizing its full benefits, akin to past technological shifts. Current productivity data may not fully capture AI's quality improvements, making its true economic contributions challenging to measure. AI predominantly augments workers, particularly less experienced ones, though automation is expected to grow. Competitive pressures will accelerate AI adoption across diverse industries. Inflation dynamics are also influenced by AI; expectations of future productivity gains could initially drive inflation before increased supply eventually lowers prices. Furthermore, AI might reduce entry-level hiring by automating basic tasks, affecting career progression, yet it can also empower less experienced staff to perform at veteran levels. Ultimately, AI is projected to enhance overall productivity, leading to improved purchasing power, but will inevitably cause job displacement for some.

The aftermath of the Iran war will leave lasting impacts, particularly on the global oil market due to potential supply disruptions. The conflict highlights how new, affordable drone and missile technology enables easier control of vital shipping choke points like the Strait of Hormuz. This dramatically increases risk for international shipping, as seen with Houthi attacks in the Red Sea, forcing rerouting and raising costs. Businesses must now factor in higher expenses for supply chain reliability, either through mitigation or absorbing disruption losses. This elevated risk will continue to drive up global product costs until defensive technologies advance.

Long-term economic growth is vital, significantly impacting future generations' prosperity and overall well-being. Even small annual growth rate differences compound dramatically over decades, leading to vastly different living standards. Businesses depend on these forecasts for capital investments and product development, as higher growth signals wealthier consumers. While some economists express pessimism about future growth due to diminishing returns, Nobel laureates like Joel Mokyr and Philippe Aghion remain optimistic, arguing new technologies like AI enable exponential progress if innovation isn't stifled. A critical trade-off exists between economic growth and stability. Policies prioritizing stability, such as strong labor protections or environmental regulations, can inadvertently hinder the "creative destruction" necessary for dynamic growth. The author predicts innovation will likely circumvent these stability-driven limits, leading to continued progress, echoing Mokyr's sentiment that "the best is yet to come."

Amidst global uncertainty from war, inflation, and AI's impact, businesses face pressure for cautious leadership. However, Cornerstone Advisors advocates for six bold strategic moves. First, abandon piecemeal modernization for a comprehensive, roadmap-driven approach. Second, focus on specific markets and products rather than chasing every opportunity. Third, develop and regularly update strategic roadmaps to guide future projects. Fourth, treat culture, like employee retention and customer satisfaction, as critical balance-sheet issues, not just HR concerns. Fifth, operationalize AI to enhance productivity and customer experience, or risk falling behind competitors. Finally, leverage mergers and acquisitions as a powerful tool for forced value creation and operational overhaul. These strategies offer a vital framework for all leaders navigating today's complex business landscape.

Business leaders often misdirect their economic focus, swayed by sensational news. Instead, they should prioritize key indicators to save time and reduce distraction. The article advises monitoring general economic activity via employment or GDP, inflation using CPI, and both short and long-term interest rates. It also suggests tracking industry-specific trends, relevant local economic data, and crucial supply-side issues like financial conditions, significant oil price spikes, and major labor disruptions. By establishing a focused economic dashboard with reliable sources like FRED, executives can gain essential insights, avoid misleading headlines, and confidently navigate the economic landscape, ultimately freeing up valuable time and attention.

Despite a slightly cooler inflation report, showing the Consumer Price Index up 3.4% annually and core inflation at 2.5%, the Federal Reserve is still likely to raise interest rates in September. Analysts anticipate a quarter-point hike, driven by persistent inflationary pressures rather than solely the latest monthly data. Economists caution against over-interpreting single-month CPI figures due to their inherent variability and sampling methods. The Fed focuses on underlying inflation, often disregarding volatile factors like tariffs or energy price swings, especially amidst the Iran War. Committed to its 2% target, the Fed will likely tighten policy due to years of excessive inflation and moderate economic growth, with the upcoming August CPI report also influencing their final decision.