Scoop: The overlooked data Trump economists see predicting a boom ahead
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Trump administration economists are spotlighting a little-noticed piece of federal data they argue shows a business investment surge is in the works — one that could have lasting consequences for U.S. growth.
The big picture: Industrial production of business equipment is an early indicator of capital spending, which ultimately fuels higher productivity and higher incomes. It has surged in the first half of the year, per Federal Reserve industrial production data.
- These are the goods companies buy in order to increase their productive capacity — a bet on future growth. It includes everything from tractor-trailers to computer servers to industrial machinery.
- Axios has learned that Treasury officials will soon begin highlighting this data as a key economic achievement of the administration.
What they're saying: "Business equipment spending leads to capital deepening," Treasury Department counselor Joe Lavorgna tells Axios. "You give workers more capital, and they can produce more with that capital."
- Lavorgna said that in his former role as a private-sector forecaster, he found that the business equipment data was a strong indicator of underlying capital spending trends.
By the numbers: Production of business equipment in the second quarter averaged 7.9% higher than in the final three months of last year, which works out to a 16.5% annual rate.
- That was the highest two-quarter rise since 1997, other than in the immediate pandemic bounce-back in 2020.
Zoom out: Lavorgna argues that this reflects businesses' enthusiasm about more favorable tax treatment for investment spending under the administration's signature tax legislation that passed earlier this month.
- "If you're confident that bill is going to get done at some point during the year, you started your capex early, and that's exactly what's happened."
- The passage of the "One Big Beautiful Bill," he said, "is likely to extend what we think will be a boom that will only be further reinforced by all the good news on AI" and its implications for worker productivity.
The bottom line: Trump administration officials view increasing business capital investment as the linchpin of their economic agenda, including ultimately driving gains in blue-collar wages.
- Expect to hear talk of this and any other indicators that suggest it's happening.
