Cathie Wood, Founder, CEO, and CIO of ARK Invest, believes the U.S. economy is on the verge of a major upswing. In a recent letter to investors, Wood suggested that the “rolling recession” experienced over the past three years is nearing its end — setting the stage for a productivity-driven economic boom and a more sustainable bull market.
Contrary to economists forecasting a prolonged downturn through 2026, ARK remains optimistic that innovation and productivity gains will spark recovery much sooner.
She believes that this “will be followed not only by a productivity-led economic boom but also a healthy, broader-based bull market” – and “deep value territory, technologically-enabled innovation” should be one of the prime beneficiaries.
Wood states that three years ago the Federal Reserve (Fed) “pushed the US economy into a rolling recession that pummelled all except the high end-consumer and the government sectors”.
Productivity-Led Recovery and Inflation
The ARK Invest CEO and CIO added that while many economists are beginning to forecast a US recession extending into 2026, ARK research suggests that the “rolling recession that has been in place for the past three years should end with clarity on tariff, tax, regulatory, and monetary policies during the next three-to-six months”.
Wood also stated that if the current tariff turmoil results in freer trade, as tariffs and non-tariff barriers come down in tandem with declines in other taxes, regulations, and interest rates, then real GDP growth and productivity “should surprise on the high side of expectations at some point during the second half of this year”.
She added: “During the current turbulent transition in the US, we think consumers and businesses are likely to accelerate the shift to technologically enabled innovation platforms including artificial intelligence, robotics, energy storage, blockchain technology, and multiomics sequencing.
“Assuming the tariff turmoil subsides during the next six to nine months, we believe the narrowest ‘bull market’ in history should give way to a much broader-based and healthier bull market. Inflation should continue to surprise on the low side of expectations, supported by the price deflation that we expect will be associated with the five innovation platforms described above.
“To the extent they are enacted, the impact of tariffs is likely to be ‘transitory’, according to Fed Chairman Powell. At the same time, news about deregulation, tax cuts, and lower interest rates is likely to be hitting the headlines. If they are made effective either retroactively or in real-time, they should catapult the economy into the accelerated growth trajectory that every technology revolution has spawned.”
Broader-Based Bull Market or Bear Market?
ARK also discussed how in the early 2000s, the market sold off for more than three years after “irrational exuberance” sent technology and biotech stocks soaring years before their underlying businesses were ready for prime time. For example, the cost to sequence one whole human genome was prohibitive, the first in 2003 $2.7 billion. Today, the cost is below $500.
Wood believes that these technologies are now “ready for prime time”.
She adds: “Investors are making what we believe is a mistake that is an inversion of the one made during the tech and telecom bubble. Investors did not fare well by chasing any stock associated with the internet during the late nineties as the tech and telecom bubble turned into a bust.
“Now, clinging to the broad-based benchmarks against which they are measured, most investors are ‘short’ the stocks of companies that literally are creating the new world. In our view, that decision ultimately will be deemed less than productive during the next few years.”
