It's easy to get so caught up in month-to-month economic data that you miss a longer-term trend emerging before your eyes.

• Here's one: There is massive new investment taking place in U.S. heavy industry that's set to shape the economic landscape for years to come.

Why it matters: The 2010s were a period of chronic underinvestment. By contrast, now there are billions flooding into large, expensive megaprojects to manufacture batteries, solar cells, semiconductors and much more.

• It is fueled by hundreds of billions of dollars allocated by the Biden administration's signature legislation — the Inflation Reduction Act, Bipartisan Infrastucture Law, and CHIPS and Science Act — as well as pent-up demand.
• It implies sustained upward pressure on demand for workers and raw materials for years to come, and makes a recession less likely by creating a floor of activity under normally volatile industries.

What they're saying: "We believe the U.S. is in the early stages of a manufacturing supercycle," wrote Joseph P. Quinlan, head of CIO Market Strategy at Merrill and Bank of America Private Bank, in a report this week.

• He emphasizes the role of foreign direct investment in the surge, as global companies rush to build large-scale facilities in the United States. He sees the trend extending well into the second half of the 2020s.
• "It's really gotten the attention of the world," Quinlan tells Axios. "When you talk to companies in South Korea, Japan, Europe, all they want to talk about is building out a presence in the U.S."

By the numbers: As of April, spending on manufacturing construction — new factories — is tracking at a $189 billion annual rate, triple the average rate in the 2010s ($63 billion).

• That helps explain some of the underlying strength in the U.S. economy even amid elevated recession fears. For example, the construction sector has added 192,000 jobs over the last year, despite higher rates hammering the housing sector.

Between the lines: The types of investment taking place in this boom tend to involve much larger capital outlays than were seen in the 2010s. For example, two European companies announced this month they will invest $2 billion in Texas for a plant to make synthetic natural gas.

• Higher rates of private investment, combined with large U.S. budget deficits, could keep interest rates higher than was the pre-pandemic norm.
• Moreover, these industrial facilities tend to create high-wage jobs, which could put sustained upward pressure on wages across the economy. That's good for workers, less good for the inflation outlook.

The bottom line: Understanding how this manufacturing boom plays out —how big and how long-lasting it turns out to be — will be crucial for understanding the macroeconomy of the remainder of the 2020s.

A top Fed official has a stern message for those who believe the central bank should back off its rate-hiking campaign in the wake of this year's bank failures.

What they're saying: "I do not support altering the stance of monetary policy over worries of ineffectual management at a few banks," Fed governor Christopher Waller said today at a conference in Norway hosted by the country's central bank and the International Monetary Fund.

• "It is the job of bank leaders to deal with interest rate risk, and nearly all bank leaders have done exactly that," Waller said.

Why it matters: In the speech, Waller said the Fed tools to address jitters in the banking system — like the failures of Silicon Valley Bank and others — should be separate from other tools. That includes interest rate hikes central to monetary policy.

• "Let me state unequivocally: The Fed's job is to use monetary policy to achieve its dual mandate, and right now that means raising rates to fight inflation," Waller said.

Yes, but: Financial stability and the Fed's economic goals are connected, even if the tools used to address each are separate. For instance, the rapid interest rate increases over the last year contributed to the stress in the banking system.

• Now, tighter credit conditions as a result of those bank failures means the Fed might have to do less to cool the economy than if those bank failures had not happened.

Waller isn't yet convinced that is the case, but he noted tightening lending conditions since March "so far are in line with what banks have been doing since the Fed began raising interest rates more than a year ago."

• "[I]t is still not clear that recent strains in the banking sector materially intensified the tightening of lending conditions."