by Rod D. Martin
September 8, 2026
Last month, the Enemedia crowed. The “experts” announced 1.5 percent growth and pronounced judgment. Trump’s promised boom had failed to arrive.
Wrong.
This month, the Atlanta Fed’s GDPNow model has third-quarter real growth running at a 4.7 percent annual rate.
As I told you then, the TDS crowd was looking at the wrong number. In the second quarter report, imports and inventories pulled the number down. But the import surge was led not by toys, trinkets, or flat-screen televisions, but by capital goods: telecommunications equipment, semiconductors, and industrial machinery.
The equipment American companies were importing to build the boom was temporarily concealing it. And right on schedule, those machines are now roaring to life.
Friday’s employment report did more than add 162,000 jobs. It showed the sequence I described last month moving into its next stage. Restaurants and local-government schools supplied much of the headline gain. But manufacturing payrolls rose by 16,000, nearly all of it in durable goods. Machinery and fabricated-metal producers accounted for 6,000 apiece, while construction gained another 22,000 jobs.
Even July’s reported loss of 23,000 jobs did not survive revision. It became a gain of 21,000. Manufacturing employment has now risen by 58,000 since December, while factory production workers are earning 4.4 percent more per hour than they were a year ago.
Indeed, the private sector has added 1.04 million jobs since Trump took office just a year and a half ago.
The industrial boom has begun to hire.
Investment Is Turning Into Production
The latest numbers tell the story. Real final sales to private domestic purchasers — the part of the economy powered by American consumers and private investment — grew at a 4.2 percent annual rate, up from the original 3.9 percent estimate. Equipment investment surged by 13.6 percent after rising 15.8 percent in the first quarter. Excluding the pandemic reopening, America has not seen back-to-back double-digit equipment-investment quarters in more than a decade.
Indeed, capital-goods imports jumped $14.4 billion, more than the entire $12 billion increase in goods imports. Computers, computer accessories, and semiconductors led the way. Yet through July, American exports were up 12 percent from the same period last year and the total trade deficit was down nearly 30 percent.
The private economy wasn’t standing still. It was buying productive capacity.
July’s trade figures show why the same buildout appears to depress GDP before it raises output. GDP subtracts an imported computer server from the trade component before the machine adds anything to American output. The same is true of a German machine tool or a Taiwanese chip-fabrication system. GDP counts where the machine was made when it arrives. Only later does it count what American workers make with it. A new plant necessarily increases construction spending and machinery orders well before the public sees its finished products or new paychecks.
But now that accounting lag is ending.
