EXCLUSIVE — Top Trump administration officials are pointing to a capital expenditures “comeback” as evidence of the efficacy of President Donald Trump’s agenda, even as forecasters maintain concerns about how his tariff policies will particularly affect future economic growth.
Despite significant stock market gains and billions of dollars in committed investments from both U.S. and foreign manufacturers, gross domestic product shrank in the first quarter of this year by .3%, marking the first quarter of negative economic growth since 2022.
“This is Biden,” Trump said during an April Cabinet meeting when asked about the Q1 numbers. “And you could even say the next quarter is sort of Biden because it doesn’t just happen on a daily or an hourly basis.”
The Federal Reserve is slated to publish its initial Q2 GDP report at the end of the month, with government estimates ranging from roughly 1-3% growth. However, senior Treasury and White House officials are touting massive increases in business equipment production as a key indicator of how Trump’s policies are positively driving capital expenditures as intended.
Joe Lavorgna, counselor to Treasury Secretary Scott Bessent, told the Washington Examiner in an interview that, prior to joining the administration in June, he thought that the Q1 GDP figures didn’t paint a complete picture of Trump’s economic gains.
Lavorgna previously spent more than two decades in the financial services sector. He served as the managing director of SMBC Nikko Securities before being appointed to his Treasury post, where he said he first began suspecting that the Q1 GDP numbers were likely “distorted” due to an unseasonably cool start to January and the Los Angeles wildfires.
Despite the suboptimal GDP report, Lavorgna said the data reflected a “massive influx of imports, in particular for industrial supplies.”
“And I just have noticed casually over the years, doing a lot of forecasting, whenever you get large relative changes, either in price or, in this case, trade, it just tends to wreak havoc with what the numbers print,” he said.
Lavorgna pushed back that the first quarter was weak under Trump and pointed to the economic indicator known as CapEx.
“Everybody’s got this perception that the first quarter was weak because of trade. I don’t believe that, because if it were weak, you would not have seen employment as strong as it is,” Lavorgna said. “You would not have seen income as strong as what it is. Leaving that all aside, the fact is people, I don’t think, are aware of what we call an incipient CapEx boom.”
In layman’s terms, CapEx refers to the funds companies reinvest into their long-term assets, including computers and other machinery, transportation or industrial equipment, or even furniture and other office equipment.
Treasury officials say those expenditures are captured in the Federal Reserve’s production of business equipment log, which, despite the poor GDP numbers, jumped 23% year-over-year in Q1. Initial Fed data suggest business equipment production will increase an additional 11% in Q2.
Furthermore, the projected 17% increase across the first two quarters of 2025 would be the largest, two-quarter gain in business equipment production since 1997.
“What if companies are going to invest in their business? It’s not going to be a person, it’s the capital. That’s what CapEx is,” Lavorgna explained. “Generally, the more you invest in capital, the more likely you get productivity to grow. And then, with productivity going up, what’s going to happen? Well, your profits are going to go up, but also the ability to hire more people, and you’ll be able to pay the people who are working for you more.”
“I mean, that’s the definition of rising living standards, being able to produce more with less, or producing more with the same amount of people, basically. So it’s sort of the rising tide lifts all boats,” he added.
Bessent touted the “CapEx comeback” in a statement posted to X on Tuesday.
“Thanks to POTUS’ pro-growth, America First agenda, we’re seeing a CapEx Comeback,” he wrote. “CapEx is up 16.6% in the first half of 2025, signaling a major investment wave underway. The One Big Beautiful Bill jumpstarted investment that’s lifting productivity, wages, and living standards. Blue collar paychecks are rising fast — second only to [Trump’s] first term — and the best is yet to come.”
However, the Trump administration’s optimism is not shared by the majority of outside economic experts.
Goldman Sachs revised its estimates for total GDP growth this year to just 1%, far below the administration’s hopes of 3% overall growth.
David Mericle, Goldman Sachs’s chief U.S. economist, cited Trump’s tariffs, specifically a newly announced 50% tariff on copper, as the critical factor in the revision.
“While it is still very early to estimate pass-through, surveys that ask businesses how much they intend to raise prices eventually also indicate lower pass-through than last time,” Mericle wrote in an assessment.
Still, White House and Treasury officials believe that Trump is likely the key driver in spurring companies to reinvest in themselves, both with his public promises to private industry and his adherence to his policy agenda, even in the face of criticism from outside economists.
Senior aides stressed to the Washington Examiner that Trump won’t sit on his heels after signing the reconciliation bill into law and will continue to hone his “deregulatory, pro-growth” policies to spur additional investments.
“I think we’re clearly laying out a policy agenda with the intention of spurring investment,” one senior White House aide said. “I think we’ve always said that we’re setting the groundwork for long-term growth, and I think this is reflective of that long-term piece.”
Trump signed his reconciliation legislation, dubbed the “one big, beautiful bill,” into law on July 4, which includes a 100% write-off for businesses’ research and equipment expenses, backdated to January of this year. Beyond CapEx, the legislation also includes a 100% bonus depreciation to incentivize the construction of new plants and factories, a core pillar of Trump’s push to revitalize U.S. manufacturing in critical industries.
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“The heavy lifting was done by the president and the secretary and many others to get this bill across the finish line, and now there’ll be trade deals that’ll help,” Lavorgna suggested. “Trump, he’s a businessman, and this is a lifelong achievement of building things. The people … they put him back in office because they loved what he did the first time around. These policies are going to work.”
Meanwhile, Trump’s economic approval ratings have sagged since Inauguration Day. A poll published Wednesday by the Economist ranked “jobs and the economy” second, behind only “inflation,” as the “most important issue” facing Americans today. The same poll found that Trump’s approval rating on the economy was more than 10 points underwater to start this week, compared to nearly 10 points positive when he was sworn into office in January.