Macro Musings with David Beckworth Ben Harris on AI, Fiscal Sustainability, and the Resilience of the U.S. Economy
16 snips
Aug 24, 2026 
Ben Harris, Brookings economist and former Treasury and CEA official, discusses why recent shocks weren’t as damaging as feared. He covers stubborn inflation and the real role of refined oil products. He debates whether AI can improve fiscal sustainability, how longer lifespans and big AI investment could raise interest costs, and policy ideas to share returns more broadly.
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Markets Expected Fed Independence To Hold
- Market expectations that the Supreme Court would protect Federal Reserve independence helped prevent a deeper financial shock after political attacks.
- Harris says informed market participants largely expected Powell would not be fired, dampening reaction.
New Investments And Refunds Offset The Shocks
- New sectoral tailwinds offset negative shocks, notably hyperscale data center investment and one-time fiscal transfers from the administration's big bill.
- Harris estimates data centers added ~0.5pp to growth and refunds added ~0.5pp to disposable income in 2026.
Refining Bottlenecks Not Crude Drive Current Inflation
- The near-term inflation outlook is ~2.3–2.5% underlying, with oil, AI, and tariffs layered on top; crude supply is less the problem than refining capacity.
- Harris highlights ~10% fall in global refining capacity (Russian strikes and Gulf damage) boosting crack spreads and refined-product prices like diesel.