US Witnessing ‘CapEx Comeback’ as Investment Wave Hits Economy: Treasury

‘I think that we could see growth and productivity well in excess of 3 percent for the coming year,’ the Treasury secretary said.

Cars on the assembly line during a tour of the Tesla Giga Texas manufacturing facility ahead of its grand opening party in Austin, Texas, on April 7, 2022. Suzanne Cordeiro/AFP via Getty Images

The U.S. economy is experiencing a “CapEx Comeback” this year as private-sector investment soars, the Treasury Department said.

Capex, short for capital expenditures, refers to investments businesses make to purchase or upgrade industrial equipment, vehicles, technology infrastructure, and machinery. Economists consider capital expenditures as a gauge of the future, as companies expand capacity or bolster efficiency in anticipation of future growth.

According to Federal Reserve Board data shared by the Treasury, capital expenditures surged at an annualized rate of 11 percent in the second quarter, following a 23 percent surge in the first three months of 2025.

In the first half of the year, capex spending is up nearly 17 percent—the largest back-to-back quarterly increase in almost 30 years.

Treasury Secretary Scott Bessent, writing in a July 22 X post, says this signals “a major investment wave underway.”

“The One Big Beautiful Bill jumpstarted investment that’s lifting productivity, wages, and living standards,” Bessent stated.

U.S. officials say the capex boom could persist in the coming months owing to the reconciliation package signed on July 4, as it contains several incentives for increased business investment.

The legislation features 100 percent bonus depreciation, allowing businesses to deduct the full cost of qualified property immediately. In addition, the Republican mega-bill includes retroactive expensing to the start of President Donald Trump’s term, immediate expensing in research and development costs, and qualified production property deduction.

During an interview with Fox News host Laura Ingraham, Bessent projected that capex spending could total $300 billion a year, or 1 percent of GDP, and lead to a productivity boom.

“I think that we could see growth and productivity well in excess of 3 percent for the coming year,” he said.

Citi analysts agree, writing in a July 17 research note that the U.S. tax law could enhance capital expenditure in the medium-term, pointing to defense, manufacturing, and robotics.

“The combination of tariff pressure and incentives such as permanent full expensing of equipment, research and development, and factory building may lead to on-shoring of industrial production in the coming years,” they said.

At the same time, they believe that since these provisions are meant to be permanent, companies may not feel the urgency to launch new projects.

Since the beginning of Trump’s second term, the United States has attracted trillions of dollars in domestic and foreign capital investment.

At last week’s AI & Energy Summit, for example, scores of companies, including Blackstone, FirstEnergy, and Google, announced $92 billion in energy and artificial intelligence investments for Pennsylvania.

Japan also committed to investing $550 billion in the U.S. economy as part of a new trade agreement. The administration will direct the money to rebuild and expand American industries, including semiconductor manufacturing, pharmaceutical production, defense shipbuilding, and energy infrastructure. The White House says the United States will retain 90 percent of the profits.

Japan is currently the largest foreign investor in the United States, with investments reaching $754.1 billion in 2024.

White House Touts America First Victories

The Trump administration has touted several victories from the president’s economic agenda.

President Donald Trump speaks to the press before departing for Scotland from the White House on July 25, 2025. Madalina Kilroy/The Epoch Times

In June, the Treasury released data indicating real (inflation-adjusted) hourly wage growth was up 1.7 percent year to date for production and non-supervisory workers, describing it as a “blue-collar boom.”

During the first five months of the previous administration, real wages fell by 1.7 percent.

Joe Lavorgna, counselor to the Treasury secretary, told The Epoch Times that the last time wages outpaced inflation at this level was during Trump’s first term. In addition, the only other president to register positive blue-collar real wage growth in the past 60 years was Richard Nixon, with a 0.8 percent rate.

“Pro-growth policies like tax reform and deregulation had a measurable impact on real wages, especially for blue-collar workers. This isn’t theoretical—it is showing up in the paychecks of everyday Americans,” Lavorgna said.

Another element of the president’s agenda that has seen substantial growth is tariff income.

According to the Daily Treasury Statement, tariff revenues surpassed $28 billion in June, contributing to the federal government’s budget surplus.

July’s figures could mirror or surpass those of last month. As of July 23, tariff revenues have exceeded $27 billion, bringing the fiscal year-to-date total to almost $150 billion.

While market watchers are bracing for tariff-driven inflationary pressures, the Treasury notes that these pressures have yet to materialize in the hard data, citing the producer price index (PPI).

The June PPI—a pipeline inflation measure of prices paid for goods and services by businesses—was zero percent and came in below expectations. Since February, tariff-sensitive PPI goods prices have declined at an annualized pace of 1 percent.