Phil Mackintosh, Nasdaq chief economist and senior vice president, painted a picture of a resilient economy during the annual MSO Symposium held Nov. 2 and shared his predictions for the year ahead, including lower interest rates.
Mackintosh said the markets have “powered through” three big challenges over the last year: tariffs, the war in Iran, and interest rate changes. There are no recessions in the world, and “growth might be slow, but it’s positive enough to weather the shocks like we’ve been seeing,” he said.
“We’re definitely seeing the economy sort of turn around; things get more positive or less negative depending on which side of the economy you’re on,” Mackintosh said. “And because of that, in the labor market, we are starting to see a little bit of strength. [At] the start of the year, this was meant to be a really good tailwind for the stock market and a really good tailwind for company profits. It turns out the tailwind is still happening. Hiring is starting to pick back up.”
According to Mackintosh, tariffs didn’t create a big dent in the global economy, and have somewhat stabilized.
“Initially there was that huge spike in the average tariff rate. It’s actually been coming down,” he said.
Interest rates have also generally been coming down.
“They didn’t affect the economy as much as you think, even though for a lot of companies they definitely created a lot of uncertainty,” he said. “In terms of your industry, whether tariffs have impacted inflation much… the answer is not much at all.”
“The general trend in this industry in inflation is you’re on a deflationary trend, and now you’ve become deflationary, so the impact of tariffs from this industry onto the CPI [Consumer Price Index] actually is pretty small,” he said.
Effects on the oil market from the Iran War were digested much better than might’ve been expected, according to Mackintosh. He said that despite 20 million barrels a day missing from global supply, and the biggest shock to oil supply caused by wars dating back to the 1950s, the price of oil didn’t go up that much.
And that doesn’t seem to be getting better when looking at shipping data, he noted.
“The war is still active from an economic and supply perspective,” Mackintosh said.
As for interest rates, he said they have gone from definitely falling to definitely rising, if you trust the market, and the reason for that is inflation. Mackintosh said interest rates are now hiking quickly because the Federal Reserve waited so long for transitory oil-driven inflation to go away.
“The Fed is not sitting there going, ‘Well, oil prices could easily come down to $70 or $60 if we resolve the war and the supply chain fixes,’” he said. “Instead, the Fed is trying to slow the economy down just in case.”
And long-term borrowing is starting to cost consumers and companies money, he said. Several developed countries, in addition to the U.S., have seen long-term interest rates increase.
“If interest rates and debt both go up, they both add to the amount of costs that we’re all going to have to pay out of our tax receipts or tax bills, so you can see net interest costs becomes bigger and bigger as a problem,” Mackintosh said.
He noted that households are trying to stretch how long they’ll own a car, increasing the number of months on a new car loan.
“It’s going up and up and up as people try to buy a car that’s going to last longer than the usual cycle,” he said.
Mackintosh called himself a contrarian for his prediction that interest rates will be lower in 12 months. He said worsening Middle East conflict causing real supply shock would be the only reason his prediction would be wrong.
“I actually think we’re more likely to see inflation fade,” he said. “If the conflict in Iran doesn’t get worse, then the oil price won’t keep going up, which means it stops being inflationary. Imagine if it goes away and the oil price comes down, then you get deflation from oil, and all of a sudden we could be talking about 2% inflation pretty quickly.”
Another deflationary factor is the aging population against a shrinking workforce.
“There’s more people retired than there are with babies needing new houses and new cars and more clothes, so the demand kind of comes out of the economy,” Mackintosh said. “Interest rates don’t need to be very high in an economy where the population is shrinking.”
Much more risk would be in play if the heat came out of the economy naturally and inflation decreased on its own, he added.
Mackintosh said layoffs near historic lows are one facet that has helped the economy. Meanwhile, hiring has softened.
“We have what we’re calling a ‘no hire, no fire’ market, so everyone feels pretty secure, but the job creation slowed down quite a lot,” he said. “People that are unemployed and staying unemployed is starting to fall, so that’s good news as well. People are actually getting into work slowly rather than seeing people lose jobs.”
Tariffs, he added, are basically done, and the price increases they caused are last year’s story. Mackintosh predicts tariff increases won’t show in the CPI in a couple more months.
Mackintosh also covered the AI boom and its effect on the national and global economies. He predicts that AI could become deflationary if it makes us more productive.
According to his data, Mackintosh said AI capital expenditures are a large proportion of what’s currently driving the U.S. gross domestic product (GDP).
“The stock market basically reacted to AI this year rather than to the economy,” he said. “AI as a sector is contributing more and more to that growth in GDP, and so it’s become a really important economic factor to the market and the economy as a whole.
Chip demand will be much higher than ever because of the high demand for data centers, along with a phenomenal demand for electricity, Mackintosh added.
For example, he said that the Meta data center being built in Louisiana needs about 30% of the electricity the state currently produces.
“This is why it’s driving the economy too, though,” he said, adding that with AI there are “a lot of known unknowns.”
“We are still building AI; we’re still making it work in products,” he said. “We’re still trying to work out what it really can deliver. On the positive side, you’ve got the growth in token volumes or the growth in actual AI queries. It just keeps going up. …the revenues have started to plateau.
“I think from an economic perspective, there’s plenty of reasons to say that it’s worth all of us doing this. And the reason I say that is if you look at the internet boom, there was a heap of CapEx, almost the same kind of scale of CapEx to the GDP in the ’90s when we were building out the internet. All the connectivity they created, the fact that we can have CarPlay in our cars and GPS, all that cool stuff is because of the internet.”
He predicts the companies that will benefit from AI might be building products we haven’t imagined.
Images
Featured image: Phil Mackintosh, Nasdaq chief economist and senior vice president, speaks during the 2026 MSO Symposium on Nov. 2. (Lurah Lowery/Repairer Driven News)
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