The Boom They Never Saw Coming

PART I

The Boom Begins

When I sat down with Treasury Secretary Scott Bessent in front of the G20 conference at Asheville, North Carolina yesterday, my intent was to work with the secretary and promote an economic growth message. And he was more than cooperative, at the top of his game.

It’s as though he was just waiting to unleash the success of the Trump economy, and he chose the G20 and our interview to make his statement. I had no interest in pursuing the minutiae of retiring off-the-run Treasury bonds, or other debt management arcana.

Instead the big picture was the economic boom, the manufacturing boom, the construction boom, the rising animal spirits in the American economy.

Here’s how I put it to Mr. Bessent: “I want to make that as clear as I can. The most important event right now in the American economy is we are in an economic boom. We are in an economic boom, the likes of which we have not seen probably for decades, if we’re being honest about it.” 

I went on to suggest that “this boom in large measure is a function of President Trump’s policies and your policies, particularly the one big beautiful bill, the tax cuts, the 100 percent depreciation. We are seeing manufacturing growth that we haven’t seen in years. We are saying construction growth that we have been seeing in years”

I could see the secretary getting warmed up. This is what he had to say in response about rising bond yields and the economy:

Larry, it’s exactly as you said. If we look at the composition of the bond yields, it’s the inflation expectations are flat to down. And this is a growth story. Growth, I believe, is re-accelerating, that we’ve had some very good discussions here over the past few days, and everyone agreed that growth has been better. Than they thought it would have been given the Iran conflict. Now, everyone is always cautious going forward, but growth has been better.

Then Mr. Bessent went on to say this: “And as you said, the U.S. sits at a very special place in the world, because we are the AI superpower, and we are pulling away the amount of compute that the U.S. has relative to global compute.”

Mr. Bessent added: “Then we reviewed the bidding because the American economic boom comes a little more than a year after Trump policies of tax cuts, deregulation, drill, baby, drill, and let’s not forget individual tax incentives on tax-free tips, on tax-free overtime, even the seniors tax relief from social security, plus taxes.”

Mr. Bessent explained that “the president’s policies have laid the groundwork for this economy. So we have regulatory certainty. The president tasked this administration with cutting the regulatory burden, and that’s part of what we’re talking about here today.”

People may be looking at bonds, but I’m looking at the fabulous stock market boom, where 156 million Americans own a piece of the rock, and it’s all being sustained by enormous profits, which are always the mothers’ milk of stocks and the lifeblood of the economy.

And then the secretary added to the economic boom story with this:

“And Larry, too, that the preamble for the manufacturing jobs are construction jobs. Right. So we are seeing, thanks to the tax bill, 100 percent expensing on equipment, 100 percent expensing on factories,” and 100 percent on agricultural structures. Plus, he added, “we are having a capex boom in factories, the precondition for that is construction jobs.”

The secretary pointed out that President Biden’s big government socialism has been restructured since Mr. Trump took office, nearly 400,000 government jobs have been eliminated, while more than 900,000 private jobs have been added. This is part of the economic boom story.

What’s more, we tried big government socialism under Biden, and it produced a 21 percent cumulative inflation rate. And to a large extent, we are still suffering the hangover from that inflation even today.

I asked Mr. Bessent about how “we’re seeing free enterprise move through this hemisphere. Very interesting. A lot of overturning of the left and socialism moving back towards free market economics.” 

Mr. Bessent replied:

Larry, I thought what was most interesting, and when you talk about socialism here in the U.S., when we look at the demographic of those voters, they are over-educated and under-earning. So these are underachievers who are jealous of those who want to go and work every day.

Got that right, Mr. Secretary.

PART II

The Engines Of Growth

Pardon me from again borrowing from my G20 interview with Treasury Secretary Scott Bessent. Yet I really want to repeat my view that the most powerful news story, however unreported, is the emergence of an economic boom that is now cutting across every sector of the landscape.

And here is more of what Mr. Bessent said to me in response to my growthier point of view:

And as you said, the president’s policies have laid the groundwork for this economy. So we have regulatory certainty. The president tasked this administration with cutting the regulatory burden, and that’s part of what we’re talking about here today.

That’s the important regulatory side of the economic boom.

By the way, that includes drill, baby, drill, where we are now producing almost 14 million barrels of oil per day, which is an extraordinary number. Plus, record natural gas and liquefied natural gas exports around the world, where Trumpian policies have made America the energy capital of the globe.

And then there’s a tax policy that the press doesn’t really want to write about. Yet perhaps the single most underrated yet powerful policy, is the permanent restoration of 100 percent bonus depreciation to deduct the full cost of qualifying investments, immediately in year one. 

Anything, machinery, equipment, restaurants, tech startups; small businesses can deduct even more up front than ever before.

This is an enormous part of the AI boom and the data center construction boom, which like the factories of old, is creating massive new job opportunities in manufacturing for working folks, like carpenters, welders, electricians, and plumbers.

And counter to the doomsday crowd, these data centers generate their own electricity, their own water systems, they pay more in taxes, and they allow localities to even cut property taxes along the way.

And let’s not forget tax-free tips, tax-free overtime, and roughly $300 billion in individual refunds during the latest tax season.

Just today, we got new numbers on the productivity of nonfinancial companies, which is now running at 3.1 percent annually over the past two years, an unheard of accomplishment. Nothing like it since the 1990s.

And the manufacturing indexes from the Institute for Supply Management are up for eight months in a row. While the service indexes are up 15 months in a row.

There is a boom out there, folks, and that’s the story that Secretary Bessent has been telling us. If only the press would listen.

PART III

The Numbers Tell The Story

Right on cue, the press got ready to print a bad jobs report for August, and then SLAM, the number comes out up 162,000. About three times the Wall Street consensus.

Of course, most of Wall Street and their liberal pals in the press just love to ignore eight straight months of Institute for Supply Management manufacturing index increases, and 15 straight monthly ISM services index increases. And tremendous gains in industrial production and consumer spending. We’ll get into the numbers in just a moment.

But let me say right here that President Trump’s economic boom has become the greatest story never told, but the story is factual. And if the GOP is gonna hang on to Congress in the midterms, they’ve got to get the story out.

As former White House counselor, Kellyanne Conway, told me the other night, “They’ve got the money, the message, they need a better sales pitch and they’ve got great messengers like you and Secretary Bessent and obviously President Trump, most of all.”

Now, about those jobs numbers, including 55,000 upward revisions for June and July, the actual job gain in August  was more than 217,000. 

Since Mr. Trump took office private jobs have gone by more than a million, while federal jobs have declined by more than 300,000. This is the Trumpian free enterprise restructuring of the economy, putting an end to President Biden’s hapless big government socialism.

And on top of that, the employment to population ratio, perhaps the best jobs indicator, moved up to 59.1 percent from 58.9 percent.

Meanwhile, manufacturing and construction and goods producing jobs keep rising. And as far as wages are concerned, in the private sector, wage gains plus hours worked gave 4.3 percent increase in the wage income proxy, which is actually higher than the temporarily inflated consumer price index.

This should come as no surprise to analysts who have been honestly tracking the numbers. Productivity is booming, so are profits, so are stocks, so are consumers, and so is the hard goods industry, where durable goods, the heart of manufacturing, is rising at double digit gains.

We haven’t seen this in decades. Can Mr. Trump take credit for it?

Well I’ll tell you what? 100 percent immediate depreciation, “drill, baby, drill,” deregulation, tax free overtime, tax free tips. you know what? That stuff is working, if only the press would report it.

Lawrence Kudlow is a Fox News Media contributor and host of both “Kudlow” on weekdays and the nationally syndicated “Larry Kudlow Show” each Saturday. This column is adapted from his monologues on “Kudlow.”