For all these reasons a vocal minority of analysts say that 2026 will be a year of strong economic growth
• the USD is plummeting
• America's trading partners are frantically looking to foster trade with more reliable partners
• Fed policy and American economic data are becoming unreliable due to political pressure
• a handful of AI companies, with questionable longevity, are driving most of the stock market's growth
We should append "say minority of analysts" to the title
Who are these more reliable trading partners you are talking about ?
Fed does not seem to do what Trump wants.
It's all the markets NASDAQ, DOW, S&P 500, most of the big AI stuff is privately held investments with the exception of Google and Nvidia.
Where are all these exports going? It feels like there is very limited amount of buyers who can actually afford Made in USA.
The article lists its reasons for why they think the economy will accelerate. You might disagree with its conclusions, but it's not dependent on taking the administration's "propaganda" at face value.
>His optimism has foundation. The effects of the One Big Beautiful Bill Act (BBB), a tax-cutting law enacted in July, will soon start to be felt. Americans will receive refunds that reflect retroactive tax cuts on income from 2025. They will also find that levies on monthly earnings have fallen. According to Piper Sandler, an investment bank, these “two years of tax cuts in one” are worth about $191bn.
It’s really dangerous to assume your political enemies are stupid and incompetent, even when they likely are. Because if it turns out you are wrong, you can only cry wolf a few times at best.
The current administration has a stated goal to reindustrialize America, and even with modest success in that it’s natural for the economy to improve.
https://www.finance.senate.gov/chairmans-news/the-one-big-be...
https://www.congress.gov/bill/119th-congress/house-bill/2480
https://www.congress.gov/bill/119th-congress/senate-bill/99
https://www.congress.gov/bill/119th-congress/senate-bill/241...
https://www.congress.gov/bill/119th-congress/house-bill/2652
Maybe examine the completeness of the sources you obtain your news from?
BBB passed. The others died. This Congress passed an historically low number of bills. If reindustrialization of America depends on Congress, we are doomed.
Two of those bills (H.R.2480 and S.99) direct the Department of Commerce to conduct studies, work with states on existing programs, and report back to Congress with the results. It sounds quite hand-wavey to me and not like we're doing anything new or exciting there. Certainly not anything that will shake up the status-quo.
S.2411: SBA will match capital from private investment funds investing in US manufacturing businesses. Sounds reasonable, but there is a cap of $500M per fund, is that enough especially given the $250M minimum required to participate? It seems like a large scale effort to bring back everything would require billions with a B. It also mentions "qualifying manufacturing projects" but I can't find anything in the bill's text on what would qualify.
H.R.2652: Changes some IRS tax law to provide incentives for companies re-homing their plants in the US. Sure, sounds fine.
None of these address the current chaos around tariffs, which seem necessary if we're going to bring everything back. Moreover, we may have already soured a lot of relationships with other countries with these shenanigans. Who's to say that foreigners want to invest in a country that's proven we elect unqualified, unserious, and corrupt people who will sever relationships and change terms whenever we feel like it? Bringing everything back will also mean higher prices (because benefits, higher wages, etc.) and that runs counter to all the messaging we heard about "Biden's inflation" on the campaign trail. How do they plan to deal with that? Tell people that it's actually fine that they're paying more because it's made in America?
Not to mention that there are other factors at play here that don't involve handing out money: the unemployment rate, human capital, and the birth rate. I personally don't believe we have enough people to work these manufacturing jobs without immigration which this admin is staunchly against[0].
0: sorta, H-1B was kept alive because of corruption but they also deported South Korean workers for show which disrupted progress on a Hyundai plant in Georgia (just as two conflicting examples)
Maybe that’s good for national security (or whatever is your values-based metric), but it’s not automatically good for GDP.
You could imagine turning a few smaller states’ economies to be more like China (from the current government subsidized agriculture business) without messing with the tech and finance industries.
I don’t understand the knee jerk reaction of assuming you have to burn something down to build something.
I agree.
However, hammering the message of "this would obviously never work" is harmful.
Because if it does work, half the country is never going to listen to you again, and the situation is already well on its way there.
Your idea of 'rural areas' is not far off from that.
It’s pretty clearly a criminal enterprise meant to enrich the president, his family, and the already wealthy.
My point is: assume evil, not stupid.
Even when it's really tempting to think your political opponents are stupid.
The current administration feels like a venture capital firm that's gotten control of the country with the intention of extracting as much value out of it as possible before jumping ship and leaving anyone not worth at least 8 figures to suffer the aftermath.
Why not go even further into the nationalist nostalgia zone?
instead of factories everyone could be working in mining, fishing and farming again...
Whether it'll work is a different topic, but it seems silly to wish failure.
>the administration has weakened tax enforcement ... as more people cheat on their payments ... the effect could be worth an additional 0.25% of GDP.
Here is the first beneficial side effect of firing and defunding all of those federal workers and agencies, especially the now-hobbled IRS. Who says "cheaters never prosper"?
We have an economic forecast of national prosperity through perdition.
No. We just concluded a multi-year tightening combined with multi-trillion dollar Fed balance sheet reduction.
Got it, yes. Though I’d argue Europe at least tried after the financial crisis.
What part are you confused by? There was more money and it was cheap. There was then less money and it became more expensive. Now it’s becoming cheap and plentiful again.
Economist, Nov 18th 1999: Readjusting the lens (The latest statistics require a new look at America’s productivity puzzle)
Economist, Sep 23rd 1999: A new economy for the New World? (Inflation may not be as dead as it seems)
The article's conclusions look wholly reasonable to me. Americans (well, the wealthy ones anyway) got a massive tax cut, and interest rates are likely to come down, especially once JPow is replaced. That should lead to greater economic activity.
However, it will also very likely lead to higher inflation, which was never really tamed, and even greater wealth inequality. That is likely to lead to even more political discontent, and I don't think anyone has a crystal ball on how that will eventually play out.
The Economist also had an article just before the 2024 election saying how the US economy was so great and the envy of the world. And that may have been true looking at aggregate numbers, but it's pretty clear huge swaths of the US electorate have seen their economic situation deteriorate. Large numbers of people on Obamacare will no longer be able to afford their health insurance, and if interest rates do come down as expected it will probably make homeownership even more unaffordable. Nevermind the real risks of the federal government's ever increasing debt unsustainability.
The economy may "accelerate", but at some point the deep structural problems will cause the wheels to come off.
2 things are sure in HN comments:
1 - orange man bad
2 - AI is a bubble
In the past the government would choose a competent industrialist to lead the construction such as Kaiser to build the Hoover Dam. Imagine the impossibility of appointing a billionaire industrialist to build CA high-speed rail in this age.
A traditional economist might define it as "the velocity of money". In a "hot" economy there's a lot of (domestic) spending (and hence selling) going on.
But this definition says nothing about the lot of the average, or below average, individual. If a trillion $ moves from individuals to govt as tax, and the govt spends that tax, then by this definition this is a good economy.
Conversely if you use the word "economy" as a place holder for personal success / improvement, being able to buy a house, afford medical care, buy groceries, eat out, have a solid job with a decent wage, well, high taxes probably aren't great.
If taxes are high, then how the govt chooses to spend the money starts to matter. If it is pumped into domestic production (aka salaries) that can be good. If that production has meaningful long term benefits (like infrastructure) so much the better. Useless spending (like on border walls, ballrooms or silly boats) can have short term gains, but dissolve in the longer term.
Cutting taxes and spending (ie austerity) has a more mixed track record of getting out of economic recessions, in my view.
Look at: the Internet, pharmaceuticals, automobile industry, energy industry, manufacturing
All downstream of massive government spending funded by taxes.
france for example has high taxes compared to USA. is it growing more or less than USA?
No one claimed this, and so no one will respond directly to your “rebuttal.”
The US has significantly higher taxes than Vanuatu, and higher growth.
World trade is dead as we know it, cross border compute is on its last wheels. Internal median buying power is also in shambles.
Tariffs are likely to be repealed by the Supreme Court; people in the administration are betting against them if that tells you anything. 2026 will be interesting.
EDIT: My speculation, not my RIA's: If the global economy wasn't backed by USD, I would recommend foreign funds/ETFs, but everything is interconnected with the US economy. Maybe in 50 years if the global economy moves to anohter currency, but what is there? sterling? renminbi? rubles? rupees? there's nothing.
I'm not sure what good gold would do you if people start physically fighting each other for food and water.
This is not financial advice.
I made a decision earlier this year to rebalance my portfolio toward more of a 50/50 split with US equities and international equities. Whatever you think of the current political situation in the US, I don't think it can be ignored that the US has shown itself to be an unreliable partner. I believe there will be real, long-term consequences to this. Believe me when I say that given the history of US markets, it brings me no pleasure to bet against them.
TIPS. Stocks. Real estate. Cans of beans.
Inflation means purchasing power going down. There are likely knock-on effects stemming from precisely why the dollar weakens. But the general treatment to a declining asset is to sell it. For dollars, that means consuming and investing.
They can't buy homes, they don't get raises. The state takes in more than ever. If anything you can argue Europe has too little capitalism going on and too much state capitalism.
No implementation would ever be good enough. We know the current system in Europe at least is collapsing because of the unbearable cost of the welfare system plus growth stagnation not because of "billionaires" (and no amount of raising taxes on the young generation or the "rich" will fix it). But it's easy to avoid dealing with the real economic problems and just blame something external being it "billionaires", the 1%, Trump, Putin, China etc (pick your favourite poison).
In this forum pretty much everyone is privileged in the country they live compared to the normal citizen. It's easy to cosplay about "utopia" when it has little direct impact on you or you can just move away to another place.
We are lead by Donkeys.