Today’s advance estimate of Q1 GDP tells us the Trump economy is growing. Business investment is surging. The private sector is rebuilding. And the federal government is finally being put on a diet.
Real GDP rose at a 2.0 percent annual rate in the first quarter. That may not sound spectacular. But look under the hood and the picture is far stronger than the headline.
Nonresidential fixed investment jumped at a 10.4 percent annual rate. That is the strongest performance since 2023 and a flashing green signal for productivity, manufacturing, artificial intelligence, energy, logistics, and industrial capacity.
For years, America lived off debt, imports, asset inflation, and government spending. That was the Biden-Harris model: borrow more, spend more, regulate more, import more, and call it prosperity.
President Trump’s model is different. Produce more. Build more. Invest more. Manufacture more. Bring supply chains home. Reward capital formation. Make America the best place in the world to build a factory, deploy machinery, train workers, and dominate the technologies of the future.
That is exactly what this GDP report shows.
Yes, the headline was held down by net exports. But that number requires interpretation. Imports subtract from GDP by accounting convention. Yet not all imports are created equal.
There is a world of difference between importing cheap foreign consumer goods that hollow out American factories and importing high-value capital equipment that helps rebuild them.
In the first quarter, the composition of imports shifted heavily toward capital goods. That is not a sign of weakness. That is the scaffolding of reindustrialization.
Factories need equipment before they produce output. Data centers need chips, servers, power systems, and cooling infrastructure before they drive productivity. Energy systems need turbines, transformers, pumps, compressors, and precision components before they generate American power.
This is the investment phase of the America First industrial comeback.
The same logic applies to the federal government side of the ledger. Government spending did not bounce back as much as conventional economists expected after the shutdown. Good.
For decades, Washington measured economic health by how fast the bureaucracy grew. Under President Trump, that old formula is being reversed. The federal workforce is being rightsized. Waste is being cut. The private economy is being asked to lead again.
Today’s durable goods report reinforces the same story.
Manufacturers’ new orders for durable goods rose in March after three straight months of decline. Strip out the volatile transportation sector, and the signal is even cleaner: durable goods orders were up solidly. More important, the core capital goods category — nondefense capital goods excluding aircraft — surged.
That is the category economists watch because it is a proxy for business equipment investment. Machines. Tools. Computers. Industrial equipment. The stuff firms buy when they are preparing to produce more tomorrow.
Core capital goods orders rose sharply in March, while shipments also moved higher. That is not a recession signal. That is not a private sector freezing in fear. That is the sound of American business gearing up.
Put the GDP and durable goods reports together and the pattern is unmistakable. The Trump economy is shifting from paper prosperity to productive investment. Less bureaucracy. More equipment. Less government bloat. More private capital formation. Less dependence on foreign finished goods. More rebuilding of the industrial base.
That is how reindustrialization begins.
First come the orders. Then come the shipments. Then come the factories, the workers, the productivity gains, the stronger supply chains, and the higher real wages.
The weak spot remains housing. Residential investment fell sharply in the first quarter, continuing to drag on growth. But that weakness is not mysterious. Mortgage rates remain too high because of the stupidity and partisanship of a Federal Reserve chairman who needs to get the hell out of Washington, D.C., when the clock strikes midnight on May 15.
We cannot be reminded too many times that Powell’s Fed committed three major blunders that have cost jobs, growth, and tax revenues: raising rates too early and too fast in Trump Term I; raising rates too late and too slow as the Biden hyperinflation began to take hold; and now lowering rates far too slowly even as the data scream to do otherwise.
As the Bard might say of Powell’s midspring nightmare: hence, get thee gone.
