Ark Invest CEO Cathie Wood Says the U.S. Economy is a “Coiled Spring”

• The U.S. economy’s rebound could begin next year.
• A confluence of deregulation involves metrics that could turn around sharply.
• Convergences among the major evolving innovation platforms could push productivity growth.

Ark Invest CEO, Cathie Wood, has described the current state of the U.S. economy as a “Coiled Spring” that could bounce quickly and sharply during the next year and beyond. Wood made the description in her New Year’s letter to investors, highlighting the various factors that characterized the U.S. economy over the past few years. 

Factors Characterizing the Current U.S. Economy

Some crucial factors Wood highlighted include a rolling recession despite sustained growth in the real gross domestic product (GDP) and a record-breaking 22-fold surge in the Fed funds rate from 0.25% in March 2022 to 5.5% in the sixteen months ended July 2023. She further compared the current situation to a scenario from about 15 years ago, when home sales and housing dropped 40% from 5.9 million at an annual rate in January 2021 to 3.5 million in October 2023.

Wood illustrated that the existing home sales are as low as they were in the early 1980s, when the U.S. population was approximately 35% lower than today.

Source: Ark Invest

Meanwhile, Wood cited a confluence of deregulation, lower taxes (including tariffs), inflation, and interest rates, as well as the rolling recession characterizing the last few years in the U.S., as metrics that could turn quickly and sharply. For that to occur, it would imply a bounce-back for the U.S. economy, as she predicted.

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Deregulation is Unleashing Innovation

Wood further noted that the identified deregulation is unleashing innovation in every sector, particularly in the AI and cryptocurrency sector, led by the first AI and Crypto Czar, David Sacks. According to her, other factors driving real disposable income growth, which has surged from approximately 2% to about 8.3% in the final quarter of 2025, include lower taxes on tips, overtime, and social security.

Notably, the effective corporate tax rate has declined, following an accelerated depreciation on manufacturing facilities, equipment, software, and domestic research and development, as highlighted by Wood.

Source: Ark Invest

Having cited several other areas where the U.S. economy reflects a compression, with the potential of a massive rebound, Wood highlighted the potential in non-farm productivity growth. She predicted a 4-6% growth acceleration year-on-year for cyclical and secular reasons within the next few years. According to Wood, convergences between and among the major evolving innovation platforms could push productivity growth to sustainable new highs and lead to significant wealth creation.

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