From Newsgroup: rec.aviation.military
the Jan 22 Kiplinger letter has plenty
of influences from AI
Dear Client: Washington, Jan. 22, 2026
The economy will pick up the pace a little bit
in 2026, with some help from Washington. However,
it will have to overcome some mounting headwinds.
Look for GDP growth of about 2.5% this year,
a little better than 2025rCOs 2.1%. A few factors
look set to give inflation-weary consumers a boost
while encouraging businesses to ramp up spending.
Bigger tax refunds will hit bank accounts
after the filing season opens late this month. Changes
in the tax code enacted in last yearrCOs tax overhaul
should translate into $65-$100 billion more in refunds.
Much of that extra money will get spent on things
like car down payments, along with smaller purchases
and, in some cases, paying down debt or extra savings.
For lower-income households dealing with high prices,
a bigger refund is no panacea, but it certainly helps.
Refunds aside, consumer spending is strong,
despite surveys showing consumers in a sour mood.
The wealthy in particular will keep spending,
buoyed in part by hefty gains in their investments
and their home values. Total household net worth
is up 26% from three years ago, to $180 trillion.
And the Federal Reserve is going to trim interest rates a bit more this
year,
on the heels of last yearrCOs cuts, making credit a little bit cheaper for many borrowers.
Other positives are linked to the economyrCOs underlying fundamentals. Productivity growth is perking up after many years of stagnating at low levels.
Economists arenrCOt sure why, exactly, but output per worker is rising by about 2% now.
Capital investment is climbing, driven in part by the tax lawrCOs extension
of 100% bonus depreciation, plus the continued frenzy of data center construction.
It wonrCOt all be smooth sailing, though. Most obviously, hiring is way down, and shows little sign of rebounding. ThererCOs no sign of an outright jobs contraction,
but monthly job creation is likely to bump along near Dec.rCOs level of
50,000 new jobs.
Employers arenrCOt laying off workers in large numbers, but they arenrCOt hiring eagerly,
either. Some are using AI to make do with less. One recent survey showed
that 17%
of businesses reported using AI for at least one function. For
unemployed folks,
itrCOs a daunting job market, and thatrCOs something people with jobs are
well aware of.
If layoffs do mount, many workers will up their saving and spend less in response.
Spending by the affluent could sputter if the stock market tumbles.
The top 10% of households by income now account for half of consumer
spending.
Tariff policies remain a moving target for businesses that rely on imports,
or are exposed to retaliatory duties on American goods, making it harder
to plan.
And of course, the geopolitical situation remains highly uncertain. A crisis could break out in any number of trouble spots with no notice during
this volatile year.
Reported from Washington, D.C. rCo kiplinger.com rCo Vol. 103, No. 4
The Kiplinger Letter (ISSN 1528-7130) is published weekly for $239/52
issues, including first-class postage, by The Kiplinger Washington
Editors, Inc.,
part of Future Publishing Limited (company number 2008885), registered
in England and Wales. Registered office: Quay House, The Ambury,
Bath BA1 1UA. Postmaster: Send address changes to The Kiplinger Letter,
P.O. Box 37234, Boone, IA 50037-0234.
THE
ECONOMY
GDP growth
2.5% in rCO26,
from 2.1% in rCO25
Interest rates
10-year bond remains in low 4rCOs
for next few months
Inflation
2.6% at end rCO26,
down from 2.7% at end rCO25
Unemployment
Peaking at 4.7% in early rCO26
but down to 4.5% by end rCO26
Crude oil
Trading at $55 to $60 per barrel
this winter
Productivity growth
2.4% in rCO26 for nonfarm business,
after 1.7% in rCO25
Economic Forecasts
Complete economic outlook at
kiplinger.com/outlooks
NEW
NEW
President Trump abruptly changed two actions related to Greenland:
HerCOs ruled out using force to take control and called off additional tariffs on some European nations. On Jan. 17, Trump had announced 10% tariffs
on eight European countries, including Germany, France and the U.K., if
a deal
for U.S. control of Greenland was not reached. This levy was set to take effect Feb. 1.
But the lack of clarity about what comes next ups the odds of future chaos.
The uncertainty over a future agreement means that the confusion of the
past week
could return. EU leaders have threatened to retaliate if any new tariffs
are imposed
on European nations, and are meeting in Brussels to discuss their next
steps.
The blocrCOs countermeasures are on hold, as is their approval of the
U.S.-EU deal.
European leaders are scrutinizing options if Trump changes his position. ChinarCOs economy is holding steady, but consumers are more cautious.
ChinarCOs annual growth rate slowed to 4.5% in the fourth quarter of 2025
and for the full year hit BeijingrCOs rCLaround 5%rCY target. Total exports rose 6.6% in Dec.,
while direct shipments to the U.S. continued to fall, sinking 30% year-over-year.
The Chinese economy will continue to face headwinds in early 2026.
The property market remains in its fifth year of decline, with major
activity indicators
down 50% to 80% from their 2020-21 peaks. ChinarCOs plunging property market has negatively impacted consumer confidence and driven the household
savings rate
up to 33%. Beijing has tried to offset some of this by providing
generous subsidies
through a massive consumer goods trade-in program, which will continue
into 2026.
Beijing is likely to issue another round of stimulus to prop up investment.
The U.K. is displaying a mix of stagnation and resilience as it enters 2026. Data from late 2025 indicate a subdued finish to the year, with growth contracting
by 0.1% in Oct., then rising by 0.3% in Nov. with a surge in car manufacturing,
after Jaguar Land Rover returned to full operation after a summer
cyberattack.
The economy figures to see a small expansion of 0.4% in the first
quarter of 2026.
The U.K. economy will remain on a path of slow growth for the full year.
Expect annual real GDP growth for 2026 to register about 1.2%, a slight deceleration
from the 1.4% estimated for 2025. The Bank of England will likely
maintain a policy
of gradual easing, with two quarter-point interest rate cuts through the
year.
Structural challenges continue to weigh on the U.K.rCOs long-term outlook, though, with elevated inflation, a soft labor market and weak business investment.
In what could be a potential long-term challenge to retail giant WalmartrCa Amazon is getting into the superstore game by building its first superstore
in a Chicago suburb, with 28% more square feet than a typical Walmart supercenter.
It will combine groceries and general merchandise, but also have its own warehouse.
Amazon has had many misfires operating its own brick-and-mortar stores.
It bought Whole Foods in 2017, but shut down its two Amazon Style
clothing stores
in 2023 and had to pause its expansion of Amazon Fresh food stores for a
time.
It also halted expansion of Amazon Go convenience stores and closed many
of them.
Amazon Books stores, which started opening in 2015, were all shuttered
by 2022.
The federal government has a promising plan to lure tech-savvy workers.
A new recruiting effort focuses on top tech talent to modernize agencies, especially with rolling out artificial intelligence. The project, known
as Tech Force,
includes a partnership with private companies, such as Amazon, Dell and Nvidia.
The nonprofit NobleReach will help recruit and vet college students for interim jobs
at agencies. The program includes mentorship, networking and skill development.
Part of the pitch is that acquired skills will transfer to the private
sector.
Rather than marketing a stable lifetime federal career, the revamped recruiting effort
will emphasize the patriotism of public service in a time of exciting
tech advances.
The Kiplinger Letter is published weekly, except for double issues as indicated on the cover of each double issue, and any other occasional
combined
or extra issues. Frequency of issues is subject to change without
notice, which may include changes in the number of double issues. If the
post office
alerts us that your issues are undeliverable, Kiplinger is not liable
for undelivered issues unless we receive a corrected address within one
year.
TRADE
GLOBAL
ECONOMY
RETAIL
HIRING
The crypto industry increasingly is flexing its muscles on Capitol Hill.
The Senate Banking Com. this month yanked a long-awaited bill
that would create a groundbreaking regulatory framework for
cryptocurrencies,
shortly after the CEO of crypto giant Coinbase withdrew his support of
the measure.
The panel had worked closely with Coinbase and other key crypto players
in drafting the bill, unveiled this month. But Banking Chairman Tim
Scott (R-SC)
postponed a vote on the bill after Coinbase CEO Brian Armstrong complained
that it would hand banks an unfair advantage over crypto, among other
issues.
Crypto for years has lobbied Congress for new industry regs, arguing
that they need a more level playing field to better compete with other financial firms.
The industry has amassed a massive war chest for political contributions intended
to advance their interests, spending millions during the 2024 election
cycle.
Scott says herCOs determined to pass a regulatory bill for crypto soon
and that all stakeholders remain committed to helping rewrite the measure. Coinbase isnrCOt ScottrCOs only headache, as the banking industry is opposed
to many of the crypto industryrCOs demands, with the chairman trying to placate both.
And Democrats on the committee largely werenrCOt in favor of the recent proposal,
although they remain eager to approve new regs for the burgeoning industry. Notably, the White House has criticized Coinbase for putting the bill at
risk
and has said it is committed to finding a solution that works for banks
and crypto.
2026 could be the year that planemaker Boeing clinches its comeback.
In 2025, the company made its most aircraft deliveries (537) since 2018,
when it saw the first of a pair of fatal crashes that resulted in
aviation regulators
around the world grounding the 737 Max and sending Boeing into a tailspin. COVID-19, supply chain snags and other issues compounded these problems.
Look for the planemaker to further ramp up production of its 737 MAX
and 787 Dreamliner, now that the Federal Aviation Admin. has eased restrictions
on the companyrCOs output. Boeing is now allowed to produce 42 737 Max aircraft
per month, a target that the company expects to hit in the early months
of 2026.
Further increases are on the table. Boeing will also increase its output
of the 787
to roughly eight Dreamliners per month, assuming that all goes according
to plan.
Boeing may even be on track to return to profitability for the first time
since 2018, which was also the last time that it bested rival Airbus in deliveries (806).
Subscription inquiries and customer service: Visit
service.kiplinger.com; e-mail
KLservice@kiplinger.com; write The
Kiplinger Letter, P.O. Box 37234,
Boone, IA 50037-0234. Editorial information: Tel. 202-887-6462; e-mail
letters@kiplinger.com; mailing address: 130 W. 42nd St., 7th floor, New
York,
NY 10036.
CONGRESS
AVIATION
Now that the president has backed off threats to take Greenland by force...
The question is whether the Trump administration can secure a deal
to, at the very least, increase AmericarCOs military presence in the
Danish territory.
Preliminary talks were light on details, although Denmark continues to emphasize
that GreenlandrCOs sovereignty is not up for negotiation. Washington may
also try
to secure access to the territoryrCOs mineral wealth, including rare earth elements.
Despite everyonerCOs short-term sigh of relief, there will be long-term issues for transatlantic relations. Europe continues to look to Washington on
matters
of national security, in part because it lacks the necessary defense infrastructure
to fend for itself against a hostile Russia. But the U.S. threatening a
NATO ally
over its territory wonrCOt be forgotten in Copenhagen or Brussels anytime soon.
Back in Washington, congressional Republicans have drawn a red line
on Greenland. Many worry that impeachment would result from Trump trying
to seize the island. They hope the issue is settled, but may still be
tested again.
Note that a majority of Americans oppose the proposed takeover of Greenland. Investors may have lodged the most important veto. The U.S. stock market
saw its largest losses since Oct. before rebounding on news of a
framework deal.
The dollarrCOs value also declined, but has since stabilized amid easing tensions.
THE
WORLD
ApplerCOs early stumbles in artificial intelligence could be a thing of
the past.
A new multiyear partnership with Google is a win for both tech giants.
The recent deal shows how Google is a leader with cutting-edge AI tech,
which Apple
will use to power a slew of consumer tools, including its updated voice assistant Siri,
set to launch this year. Apple has been touting its AI product, Apple Intelligence,
but delays and lackluster features rankled users and made many investors nervous.
Now, Apple will see drastic upgrades for AI tools for writing, photo
editing, search,
fitness, shopping and especially Siri, which will be more like a
personal assistant.
ApplerCOs revamped strategy means AI use could soar this year, since iPhones and other Apple devices are so widely used. Note that Apple Intelligence
works only
on newer devices. At least 200 million Apple devices in use can now
harness it.
New AI features could be a tailwind for Apple sales, as users upgrade
older devices.
Expect 2026 to be a less volatile year for fertilizer prices. Unknowns
remain,
especially on the geopolitical side. But the trade situation should improve amid thawing U.S. relations with China and a rollback of certain
fertilizer tariffs.
Of the three major fertilizer typesrCanitrogen, potash and phosphaterCathe U.S. meets most of its own nitrogen demand, but imports 95% of the potash
that it uses.
But fertilizer prices remain elevated, up roughly 14% from the same time
a year ago and more than double where they were a decade ago. Note that
prices
have retreated from the highs of last year and the record levels seen in
2022.
The chemical industry is anticipating yet another year of weak growth.
Look for U.S. chemical output to grow by 0.3% this year, down from 0.7%
in 2025 and on par with 2024 growth. Basic chemical output will increase
by 1.2%,
while production of specialty, agricultural and consumer chemicals will decline.
12 of 20 key chemical end-use sectors are expected to see growth in 2026,
up from nine in 2025. Data centers, aircraft and pharmaceuticals are
bright spots,
while other mainstays of chemical demand, such as autos and housing,
will struggle.
Business is expected to improve throughout the year, setting the stage
for more robust growth in 2027 and 2028. But uncertainty in the U.S.
economic
and trade situation will weigh on the industry and could alter its outlook.
The NBA is eyeing Europe as its next frontier, proposing a new league.
But the EuroLeague, EuroperCOs most elite hoops outfit, is crying foul.
The NBArCOs plan is to launch in 2027, encompassing European clubs and new ones.
The NBA has already held talks with some of EuroperCOs biggest clubs about joining.
NBA Commissioner Adam Silver has shrugged off the complaints from Europe, suggesting that the NBA is positioned to run a better and more
profitable league.
The EuroLeague has struggled financially and many of its clubs are mired
in debt.
European officials in several countries have panned the NBArCOs proposal.
But some of EuroperCOs biggest clubs are listening, enticed by the promise
of a big financial windfall. The European Union may get involved if
talks pick up.
The NBA appears to have the patience and money to get the deal done.
Silver has cautioned investors that it may take years for the league to
reap big profits,
but the NBA seems determined to get a foothold in Europe, long a coveted market.
Yours very truly,
Jan. 22, 2026 THE KIPLINGER WASHINGTON EDITORS
P.S. Need tax advice? Check out KiplingerrCOs Tax Tips, a free e-newsletter packed with practical tax planning insight. Visit
kiplinger.com/go/taxtips to sign up
--- Synchronet 3.21b-Linux NewsLink 1.2