Treasury Secretary Scott Bessent spent much of last year predicting that the Trump administration’s policies would set off a boom in capital spending. The boom would begin with artificial intelligence and a handful of enormous factory projects, spread across the industrial economy, and eventually produce jobs.
The latest manufacturing data look remarkably like the economy Bessent described.
The Federal Reserve reported Tuesday that production of business equipment rose 0.8 percent in July and 6.6 percent from a year earlier. It grew at a 12.7 percent annual rate in the second quarter, accelerating from 7.6 percent in the first.
The CapEx Comeback
Bessent first forecast the boom at the Milken Institute conference in May 2025. “The primary components of the Trump economic agenda—trade, tax cuts, and deregulation—are interlocking parts of an engine designed to drive long-term investment in the American economy,” he said.
The One Big Beautiful Bill restored 100 percent expensing for machinery and equipment, immediate expensing for domestic research and development, and temporary full expensing for qualifying factory structures. And, importantly, it made this permanent.
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