There is a faster way to read the U.S. economy than reading the economic data. Look at the price of copper.

The metal has gained nearly 50% over the past 12 months, its strongest rolling annual advance since 2021. It is also testing all-time highs after reaching $6.52 per pound on Monday, trading just 2% below May's all-time highs.

Copper appears to be saying the economy is booming and industrial stocks had already seen it coming.

Why Wall Street Calls It Doctor Copper

Copper has never published an economic forecast, and it has never had to revise one.

That is roughly how it earned a medical degree it never studied for.

Traders have called it Doctor Copper for decades because the metal keeps diagnosing the economy before the economists do.

The logic is unglamorous, which is why it works. Copper goes into wiring, motors, transformers, pipes, vehicles, factories, power grids and now data centers.

It is the circulatory system of anything that has to be built or electrified, and at scale it has no substitute.

What Is Driving Copper Higher?

Data center construction will embed close to 500,000 tons of copper in 2026, according to Kpler estimates. Total global copper demand growth this year is roughly 450,000 tons.

Artificial intelligence is not a large share of copper demand. It is nearly the entire share that is growing.

The physics are brutally simple.

A megawatt of data center capacity carries 27 to 40 tons of copper before anyone connects it to a grid — Microsoft's Chicago campus alone required roughly 2,177 tons for 81 megawatts.

Equities tied to copper have seen a similar strong performance. The Global X Copper Miners ETF (NYSE: COPX) returned 72.13% over the past year. Freeport-McMoRan Inc. (NYSE: FCX) gained 39%, versus 16.3% for the S&P 500.

Consensus estimates put combined capital spending at Amazon, Alphabet, Microsoft, Meta, Oracle and SpaceX at $1.1 trillion next fiscal year, up from $860 billion, close to 3.2% of projected U.S. GDP.

The AI boom is increasingly becoming a construction boom.

That is important because the same spending already created shortages elsewhere in the AI supply chain. Memory, cooling and power infrastructure have all become beneficiaries as hyperscalers pour capital into physical infrastructure.

Demand explains copper's direction.

Supply explains the violence of the move.

The International Energy Agency laid out that arithmetic in a July 27 report: average ore grades have fallen 40% since 1991, and only 5% of the copper deposits found in the past 35 years were discovered in the last decade.

On the current project pipeline, it concludes, primary supply runs 25% short of requirements by 2035.

The Economy Is Firing On All Cylinders

Then the confirmations landed.

The Atlanta Fed's GDPNow model opened the third quarter at 5.0%, against 1.5% of actual growth in the second. Only one quarter since 2021 has grown faster than 4.4%, and that was the 4.9% of the third quarter of 2023.

The Institute for Supply Management went further. Its Manufacturing PMI registered 55.6% in July, up 2.3 points from June and the highest reading since May 2022. The Production Index jumped 6.3 points to 58.5%, the strongest since November 2021. Fifteen of eighteen manufacturing industries grew; only chemical products contracted.

And the labor line finally turned. The ISM Employment Index reached 52.8%, expanding for the first time in 33 months.

Factory hiring had been contracting since before the last Federal Reserve tightening cycle ended. It stopped in July.

Jeffrey Roach, chief economist at LPL Financial, reads that as the beginning of a long-awaited renaissance in manufacturing employment, with reshoring efforts finally showing up in the data.

“Supply-chain pressures still are pushing up both output and prices,” wrote Oliver Allen, senior US economist at Pantheon Macroeconomics.

The Industrial Select Sector SPDR Fund (NYSE: XLI) has returned more than 18% this year, sharply outperforming the SPDR S&P 500 ETF Trust (NYSE: SPY)'s 11% gain.

The sector's heavyweights have already returned over 40% during the same period.

Caterpillar Inc. (NYSE: CAT) is up 43.1% year to date, and GE Vernova Inc. (NYSE: GEV) is up 51.8%.