Title:   Haymaker Daily — Deficits, doubts, and data centers
Source:  Haymaker (David Hay's Substack newsletter)
Author:  David Hay (co-founder/ex-CIO Evergreen Gavekal; passive owner of Evergreen Gavekal)
Date:    2026-JUN-09
URL:     https://haymaker.substack.com/p/haymaker-daily-8d2
Type:    Written newsletter (no video / no timestamps). Saved for personal study.
Note:    Article text captured from the published post. The live post is the source of truth (charts/tables omitted here).
         This is a macro piece — no individual stock picks.

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Hello, Subscribers:

Crosscurrents in the American economy today are both powerful and numerous. For example, consumer sentiment is
extraordinarily depressed, sales of big-ticket items such as cars and homes are sluggish at best, the price of
gasoline and electricity is surging, tax receipts are notably decelerating, and CEO surveys are revealing
increasing pessimism. On the latter, only 15% see the economy as improving while 47% indicate it is worsening.

On the other hand, soaring spending on AI data-center construction and the federal deficit increasing by $365
billion to over $2 trillion this year (per the Office of Management and Budget), are generating a high level of
economic buoyancy. Further, based on the Trump administration's intent to increase military spending by $500
billion, it is reasonable to expect even more fiscal stimulus for the economy.

Both of these positive factors are likely to ebb before long, particularly if the great data center build-out
soon hits a wall and bond [yields keep rising]. Per [a recent estimate], roughly half of planned data centers
are either being delayed or cancelled outright, mostly due to a lack of power supplies. On the second point,
vaulting interest outlays are already becoming problematic and long-term Treasury bond yields are threatening to
break above 5%.

However, a more enduring source of economic vitality is what has been happening with productivity. As you can
see in the following tables from J.P. Morgan's Chairman of Market and Investment Strategy, Michael Cembalest,
both Real (inflation-adjusted) GDP and Gross Domestic Output are experiencing dramatic productivity accelerations
in the wake of AI (ChatGPT) arriving on the scene in late 2022. These are big numbers and are critically
important in an economy like America's where labor force growth has gone missing over the last year.

Moreover, it's fair to believe that the productivity boost from AI is in its early days. Accordingly, it's
reasonable to expect it to remain well above normal; if so, this should help offset some of the fading fiscal
and data-center impulses described above.

[Disclosures: David Hay is a passive owner of Evergreen Gavekal, an SEC-registered investment adviser; as of
03/31/2025 he has no involvement in Evergreen's day-to-day operations, research, or investment management. The
views herein are his personal views. Not investment advice.]