Investor Cathie Wood said the U.S. economy may be in for a “shudder” as it adjusts from an environment of decreasing interest rates to one where interest rates are rising.
“Even in 2017 when interest rates went up, we had phenomenal performance,” said Wood. “I want to disabuse people of that notion. But nonetheless, the way algorithms work these days, we think that there will be a reality check.”
Wood said she is not deterred by the possibility of a stock market pullback, and ARK Invest is continuing to invest in innovation plays around robotics, AI, blockchain, and energy storage.
Overall, Wood is still bullish on the economy. While some fear a “bubble” on the horizon thanks to the massive increase in tech stock valuations, in part led by the AI boom, Wood said AI is not causing a bubble.
She bets that a coming productivity boom will help push up the stock market even further later this year.
“We think that the economy, the U.S.—and the rest of the world, of course will participate—is going to move into a productivity driven boom, just in time for our midterm election,” Wood said.
Still, it’s unclear how the economy will fare in the coming months amid instability. The Trump administration, despite passing an effective corporate tax, the Big Beautiful Bill earlier this year, which Wood said will fuel innovation, has also whipsawed on tariffs. Last week, President Trump levied an additional 10% tariff on trading partner Canada after the Province of Ontario aired an anti-tariff ad that featured former President Ronald Reagan.
Wood, though, credits the administration with its approach to regulation and innovation and said its policies could help business overall.
“They’re very focused on deregulation, massive deregulation. We have a crypto and AI czar never have had that before, and they’re focused on business friendly policies—inviting more foreign direct investment into the United States, especially in the manufacturing realm.”
