The US Economy Is Stronger After One Year Of The Trump Administration

The US Economy Is Stronger After One Year Of The Trump Administration One year into Donald Trump’s new presidency, the verdict from the data is clear: the apocalyptic consensus forecasts have failed, and the United States stands as the only major developed economy combining strong growth, controlled inflation and fiscal consolidation. The same analysts and institutions that applauded massive stimulus, monetary excess and regulatory excess under the previous The same analysts and institutions that applauded massive stimulus, monetary excess, and regulatory excess under the previous administration now struggle to explain why the U.S. economy, which they expected to sink into stagflation, is instead outperforming all of its G7 peers. Furthermore, the U.S. peers that followed net-zero, big government and big tax policies are in secular stagnation. From the “tariff tantrum” to a global surprise When Trump announced his new wave of tariffs and trade policy, much of the global consensus rushed to predict a disaster. I called it the tariff tantrum. Commentators warned of an inflation surge beyond 2021 levels, 6%-7% Treasury yields, collapsing investment, a recession, and a world turning its back on the United States in favour of supposedly more responsible governments in Europe.​ Twelve months later, none of those predictions materialised. Instead, the U.S. 10-year yield has fallen to 4.1%; the U.S. is the only G7 economy growing robustly, while those nations that doubled down on hyperregulation, aggressive climate‐driven restrictions, high taxes and ever‐bigger government spending are stuck in stagnation despite enjoying a very positive tailwind of low oil and gas prices. The “tariff tantrum” never became the structural shock that critics announced, because tariffs-however debatable on other grounds-do not cause inflation because they do not add currency units to the economy; uncontrolled public spending and monetary excess do. ​ Growth, investment and a rare fiscal adjustment. The performance of the U.S. economy in 2025 is extraordinary not just in relative terms, but on its own merits. Real GDP is growing by around 3.8%, with the Atlanta Fed tracking roughly 3.5% annualised in the third quarter, and private investment is expanding at close to double-digit rates. Crucially, this improvement is happening while federal spending is being cut, not expanded as in other peers: public expenditure has fallen by about 3% over the year instead of disguising poor growth with unproductive federal outlays. ​ All international institutions have had to adjust quickly. The IMF, which initially projected a much weaker performance, now expects U.S. growth of about 2.1% in 2026, and several major research houses have revised their forecasts for 2025 up to around 2.5%, after initially warning of zero or even negative growth. Some economists have publicly acknowledged that the profession misread both the resilience of the U.S. private sector and the real impact of the tariff shock, admitting that from January onwards the consensus The consensus was consistently incorrect about the direction of the economy. ​ The most important factor is that the American expansion is not due to another wave of debt-fuelled political spending but...

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