After Donald Trump’s reelection, business investments have surged significantly.
This resurgence in capital expenditures, or “Capex comeback,” isn’t particularly surprising. With the GOP in Congress, it meant we could expect a shift from the previous administration’s tax and spending failures to policies similar to those that previously bolstered the economy under Trump. The rise in Capex is quite remarkable.
Recently, Treasury Secretary Scott Bessent pointed out that “Production of business equipment saw an 11% annual increase in the second quarter after a huge 23% jump in the first quarter, marking the strongest non-pandemic consecutive growth since 1997.” Just to clarify, that’s nearly 30 years ago!
To be clear, capital expenditures, which encompass business spending on buying, maintaining, or upgrading fixed assets like buildings and machinery, rose by 16.6% in the first half of 2025. This alignment is notable.
So, what accounts for this sudden shift?
In simple terms, the future feels different now. And that’s a good thing. Let me delve into it.
To suggest there’s a stark difference between Kamala Harris’s and Donald Trump’s visions for the future, driven by distinctly different policies and priorities, would be quite the understatement. This level of contrast appears unprecedented in recent presidential elections.
Harris seems to continue the Biden administration’s trajectory when it comes to regulations and federal spending. Ronald Reagan’s paraphrased humor comes to mind: “If it moves, it taxes it; if it keeps moving, it regulates it.”
In contrast, Trump champions lower regulations, reduced taxes, and constrained federal spending (remember the mantra: Drain the swamp!). His reelection has notably altered the landscape for economic growth and investment prospects, prompting companies to invest in futures that seemed unlikely before.
Consider a few points:
Regulations
The American Action Forum (AAF) reports that the Biden administration has added over $1.8 trillion in regulatory costs. Harris seems poised to continue that trend.
On the other hand, Trump’s executive order 14,192, enacted on day one of his second term, mandates that any new regulation must eliminate 10 existing ones. So far, the AAF estimates that the Trump administration has reduced the regulatory burden by about $86 billion. And he’s just getting started.
Less regulation tends to encourage growth.
Taxes
Biden’s budget has consistently called for substantial tax increases, with his final proposal featuring a $4.9 trillion hike. When asked if Harris would diverge from Biden on this, the response was, “Things come to mind.”
Trump successfully campaigned against the $4 trillion tax increase slated for next year. Not only did he block that increase, but he also introduced tax provisions to stimulate investments in machinery, tools, and innovative research.
Tax policies that promote growth tend to foster further economic expansion.
Federal Spending
Biden’s budgets have also shown a tendency for considerable spending increases, with his final proposal suggesting a $1.7 trillion rise. The projected total federal spending of $84.931 trillion from 2025 to 2034 seems not enough for him, illustrating a lack of restraint. Harris is expected to follow suit.
The Trump administration’s forthcoming 2026 budget hasn’t fully materialized, but the preliminary “Skinny Budget” called for cutting discretionary non-defense spending by 22.6%. While there’s skepticism about Congress adopting such cuts, progress has already been made, unlocking the government’s Department of Efficiency and generating an estimated $190 billion in savings. This amount is effectively being redirected from the public sector back into the private sector.
Shifting resources back to the private sector generally spurs growth.
Business investments often represent the most volatile aspect of GDP, but the rebound in Capex is very real. That’s happening as the Trump administration pursues economic strategies aimed at igniting growth and prosperity in America, with support from Congress.
