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by Rod D. Martin
August 4, 2026
Last week, the Enemedia crowed. The “experts” announced 1.5 percent growth and pronounced judgment. Trump’s promised boom had failed to arrive.
They were looking at the wrong number.
The Commerce Department’s second-quarter report found that real final sales to private domestic purchasers — the part of the economy driven by American consumers and private investment — grew at a 3.9 percent annual rate, up from just 1.7 percent in the first quarter. Consumer spending and business investment both rose. Federal nondefense spending fell. Private America accelerated as nondefense Washington shrank.
So why was the headline only 1.5 percent? Imports and inventories pulled it down. And the import surge was led not by toys, trinkets, or flat-screen televisions, but by capital goods: telecommunications equipment, semiconductors, and industrial machinery.
In other words, the equipment American companies are importing to build the boom is temporarily concealing the boom.
That is how GDP accounting works. Imports subtract from the trade component because the machines were made abroad. But once installed in American factories and businesses, those same machines help American workers produce more goods and services, raise American productivity, replace future imports, and create future exports. National Economic Council Director Kevin Hassett made exactly that point when challenged over the disappointing headline: the 1.5 percent figure contained the machinery of its own sequel.
That sequel is already written.
I Told You This Was Coming
In February 2025, I wrote that Trump was turning America into the world’s energy powerhouse, using abundant oil and natural gas not merely to lower costs at home but to take markets from Russia and OPEC, supply our allies, strengthen the dollar, and turn trade negotiations into long-term orders for American energy.
Last June, I described “The Economic Boom Already in Progress”, laying out Trump’s combined strategy: permanent tax cuts, deregulation, energy expansion, tariffs as leverage, spending restraint, and investment-led industrial rebirth.
Last July, when Congress made the Trump tax cuts and immediate business expensing permanent, I introduced Grover Norquist’s explanation of why permanence would unleash purchases of plants and equipment that temporary provisions never could.
Then, in January, I went on Fox Business and NTD to predict the coming 2026 economic boom. I specifically pointed to the permanent tax cuts, Trump’s deregulatory offensive, $18 trillion in multi-year investment commitments, the reshoring of manufacturing, sharply higher defense spending, and the energy revolution.
I could list a hundred others, but the main point was always this: 1982 and 1983 were exactly the same. Real and permanent tax cuts spurred a surge in CapEx that slowly but surely transformed the economy. And in 1982 and 1983, the Enemedia breathlessly told us how the terrible economy and Reagan’s “trickle-down economics” (their term, not his), would result in his being a one-term President and leaving office in disgrace.
Yet he was right. And in 1984, he won 49 states.
So here we are again.
Trump’s Plan Was Never Just a Tax Cut
As they do with his foreign policy, the political class keeps analyzing Trump’s economic program one policy at a time. That guarantees they will miss it until it slaps them in the face (and if the 1980s are any indication, they’ll deny it even then).
But piecemeal gets you nowhere. The plan is a system. First come the trade agreements and investment commitments. Then land, permits, construction, equipment, workers, and suppliers. Production and exports follow.
Permanent tax cuts and full, immediate business expensing reward companies for building here, now. Massive deregulation — 137 regulations repealed for every one new one — shortens the time between deciding to build and opening the doors. Abundant energy powers factories, AI, ports, mines, pipelines, and refineries. Defense expansion creates long production runs for some of the most advanced manufacturing on Earth.
Tariffs create leverage to open foreign markets, rebalance trade, and redirect supply chains away from China. Access to the world’s richest consumer market is exchanged for purchases, investment, and production inside the United States. And by exempting foreign companies from tariffs if they build plants here, the world is incentivized to create jobs in America and sell to its workers.
Growth strengthens the dollar and the Treasury market. Energy exports reduce and eventually eliminate the trade deficit while securely supplying our allies. A larger productive economy raises incomes, revenue, and America’s ability to carry, and eventually pay off, its debt.
All these things helped Trump recruit more than $18 trillion in foreign and private investment, an utterly unprecedented number that’s almost two-thirds of the entire U.S. economy. But Trump also traveled the world to pitch those deals, and consistently came home with gold. No President has ever been more hands-on in building American jobs and the American future.
That pipeline now stretches across semiconductor fabs, pharmaceutical plants, steel and auto expansions, LNG terminals, pipelines, ports, and nuclear power stations. And the parts compound: AI requires electricity; electricity requires gas, nuclear power, turbines, and transmission; fabs require precision machinery; defense requires chips, metals, propulsion, and electronics. One investment creates demand for the next, and each of them increases the industrial base and the ability of middle-class families to live on one good income again if they wish.
The inevitability of deindustrialization was a lie. America deindustrialized due to bad policy decisions by both parties. It took draining the swamp to begin to rebuild America’s heartland.
In the second quarter, manufacturing output rose at a 4.7 percent annual rate. Total industrial production rose at a 4 percent rate. The ISM manufacturing index reached 53.3 in June — its sixth consecutive month of expansion — with new orders at 56. Durable-goods orders increased even without transportation, while orders for computers and electronic products rose 3.1 percent.
Productivity is rising too. Nonfarm business productivity increased 2.8 percent over the past year while unit labor costs rose just 0.5 percent. Since the current business cycle began, productivity has advanced at a 2.1 percent annual pace, far above the prior cycle. That is exactly what capital deepening and artificial intelligence are supposed to do: give each worker better tools, increase output, and suppress costs.
It’s also why replacing Jay Powell with Kevin Warsh at the Fed was so important. Powell, like so many of his predecessors, believed that growth was inflationary. No, moron, money printing is inflationary! Stop it! Just stop! And Warsh will do exactly that. But he’ll also encourage the growth instead of pumping the brakes, just as Paul Volcker did once he’d tamed inflation.
The same transformation is happening in energy.
U.S. petroleum exports reached a record 13.6 million barrels per day in April. Back when all Democrats could talk about was “Peak Oil”, total U.S. production was just 5 million. Crude exports alone are topping that now, reaching 5.6 million barrels per day. Total American energy exports set another record in 2025, while net energy exports rose 20 percent. LNG shipments to Europe reached an all-time high.
That means enormous plant expansion, export income, and jobs. It means European factories operating on American, not Russian, gas. It means allies buying from Texas and Louisiana instead of financing Moscow, Tehran, or Doha. It also means the cheap, reliable power required for EVs, AI, robotics, and the advanced manufacturing buildout already underway.
Energy dominance is the foundation beneath the industrial supercycle — and one of America’s most powerful instruments of statecraft.
Defense Shows What a Supercycle Looks Like
Just as under Reagan, nowhere is the transformation more visible than in defense.
The President’s FY2027 proposal calls for an incredible $1.5 trillion in defense spending, a nearly 50 percent increase, with industrial capacity, shipbuilding, munitions, missile defense, space, and drones at its core. It’s a defense buildup of historic scale, aimed not merely at buying more but at restoring America’s ability to produce at scale. And just as Reagan’s buildup came at exactly the moment America needed it to win the Cold War, Trump’s hits just as China is rapidly expanding its forces and threatening global peace.
When Maria Bartiromo recently asked Lockheed Martin CEO Jim Taiclet whether the industry was entering a defense supercycle, his answer was wonderfully direct: “We think we are.”
That wasn’t in a vacuum. Lockheed had just reported $65 billion in new orders and a record $230 billion backlog — before the enormous new seven-year Patriot PAC-3 agreement Taiclet said would push the total toward $300 billion. Patriot interceptor production is moving from roughly 600 per year toward 2,000, fast. Advanced Precision Strike Missile (PrSM) and THAAD production are way up. And of course Golden Dome will require a vast new industrial ecosystem of satellites, sensors, interceptors, command networks, high-power microwave weapons, and yes, lasers.
But the most important number may be the one almost no one noticed. Lockheed has already invested more than $1 billion in its munitions expansion and expects the total to reach roughly $9 billion over the next three to four years. That includes buildings, materials, tooling, supplier financing, and other costs required before the finished weapons roll off the line.
Five- to seven-year government commitments make those investments possible. A manufacturer cannot expand a plant, finance suppliers, qualify new sources, buy years of material, and train thousands of new and badly needed workers against one-off orders Congress may or may not renew. Long production runs turn demand into something a company can build against. They also greatly reduce the unit cost and the time to completion for the taxpayers.
Lockheed is the most obvious recent illustration. But it’s not alone.
Last week, the Navy put five Columbia-class ballistic-missile submarines and nine Block VI Virginia-class attack submarines under contract as part of a $76.6 billion package that also includes shipyard-productivity investments.
The significance isn’t just fourteen hulls. The significance is the speed to completion and the certainty required to expand desperately needed production capacity, and with it, employment.
American defense procurement is prone to ordering a tiny number of ships or planes, then re-debating the entire program while costs and delays mount, until Congress just pulls the plug. The result is too few of everything, and at many times the projected price. That’s stupid. It’s also self-defeating, because it cripples manufacturers’ ability to maintain, much less expand, production lines or the highly skilled staff required to run them. It’s a system only the Beltway could love.
By contrast, multi-ship commitments give Electric Boat, Newport News, and their supplier networks a demand curve against which they can invest. Electric Boat plans to hire 8,000 workers across Connecticut and Rhode Island this year. HII has expanded distributed shipbuilding to 25 locations in 11 states, adding capacity equivalent to more than 1,000 jobs and helping increase its shipbuilding throughput 14 percent last year. If Trump’s team has anything to say about it, those numbers are about to explode upward.
You can’t command the seas with ships you can’t build, refuel, repair, or replace. Trump isn’t just buying missiles and submarines. He’s rebuilding the machine that builds them.
And the Pentagon is far from the only buyer. European allies and even Canada increased defense investment by 20 percent in 2025, with every NATO member finally reaching the promised 2 percent threshold. EU defense spending rose to €418 billion last year and is projected to reach €454 billion this year.
As they do, they become customers, investors, and co-producers. From Seoul to Saudi Arabia, from Turkey to Tokyo, America’s alliance system is stepping up in response to Trump’s call for them to act as partners, not dependents. Their rearmament enlarges the market for American weapons and components while strengthening the free world’s production network and deterrence.
The Boom Is in Its Construction Phase
What we’re seeing right now is an order-book, equipment, construction, capacity, export, and productivity boom. Finished factories, full-rate production, broader hiring, and rising industrial wages come later. You don’t hire the entire operating workforce before building the plant. You don’t deliver the submarine before expanding the yard. And you don’t get the later output without making the earlier investment.
You didn’t in 1983 either.
For a generation, America’s ruling class told us manufacturing was gone forever. China would build; we would consume. Russia and the Middle East would supply the energy. Europe would regulate. America would borrow, import, and manage its inevitable decline.
Trump rejected every part of that idiocy.
Now private domestic demand is growing at 3.9 percent. Manufacturing is expanding. Productivity is rising. Energy exports are setting records. Factories and data centers are under construction. Defense companies are investing billions in new capacity. Allied demand is accelerating. And trillions of dollars are moving through the pipeline from commitment to construction to production.
Even the inflation data cut against the Enemedia’s story: core PCE price growth slowed from a 4.4 percent annual rate in the first quarter to 3.4 percent in the second, even as private demand accelerated.
The Trump economic boom is here. But we’re only seeing the leading edge of a Cat 5. The American industrial supercycle has begun.
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