Investment wave surges as business equipment production skyrockets
- Production of business equipment rose significantly, with an annualized increase of 11% in Q2 2025 and a 23% rise in Q1.
- Capital expenditures climbed 16.6% in the first half of 2025, indicating strong business investment.
- The data suggests a substantial investment wave is occurring, driven by tax cuts and tariffs, according to Treasury Secretary Scott Bessent.
In the United States, a significant increase in production of business equipment has been observed, with strong indicators of an impending investment wave. Treasury Secretary Scott Bessent recently highlighted that production of business equipment saw an annualized increase of 11% in the second quarter of 2025, following an impressive 23% growth in the first quarter. This back-to-back growth is noted as the strongest since 1997, reflecting a healthy economic recovery from the pandemic's disruptions. Furthermore, capital expenditures have escalated, reporting a 16.6% rise in the first half of 2025. The Federal Reserve's data indicates that business equipment production reached its highest level in nearly three years by June, making it the second-best month since the onset of the COVID-19 pandemic. Pre-pandemic levels saw an all-time high in spending recorded in April 2018, emphasizing the drastic changes that have occurred since then. In this context, Bessent credited several factors that have played pivotal roles in driving this growth. His comments came during an interview on Fox Business’ “Mornings with Maria.” Bessent pointed towards the tax cuts associated with the One Big Beautiful Bill as a major catalyst for this surge. Additionally, he mentioned how tariffs have led to the reshoring of jobs and investments, which are crucial for fostering a conducive environment for business growth. The rise of artificial intelligence technology is also mentioned as an influential factor contributing to this upswing in capital expenditures. These developments signal a robust recovery trajectory and point to increased optimism among businesses towards investing in their operations. The restoration of full expensing of capital investments has been characterized as particularly beneficial, facilitating companies to make substantial investments without immediate tax burdens. The combination of favorable fiscal policies, reshoring trends, and technological advancements presents a picture of an economy rebounding strongly and setting the stage for continued investment growth in the months to come.