America's economy looks set to accelerate

https://www.economist.com/finance-and-economics/2025/12/30/americas-economy-looks-set-to-accelerate

by andsoitis • 7 months ago

35 135 7 months ago

chvid• 7 months ago

“A monetary-fiscal loosening is coming” is this not the permanent state of affairs? And not just in America but just about any country in the world.

JumpCrisscross4• 7 months ago

is this not the permanent state of affairs?

No. We just concluded a multi-year tightening combined with multi-trillion dollar Fed balance sheet reduction.

mistrial9• 7 months ago

"tightening" from zero interest ?!?

adammarples2• 7 months ago

That's a monetary tightening, fiscal policy has been getting looser in all developed nations for a while, except places like Greece which were forced to tighten

nemomarx2• 7 months ago

So we're still testing out if tax cuts can increase consumer spending and grow the economy, then?

websiteapi7• 7 months ago

Is there proof high taxes grow the economy?

AngryData• 7 months ago

There is proof that infastructure improvements grow economies, which is usually paid for through taxes. Of course there is no guarentee tax increases will go towards infastructure.

nemomarx2• 7 months ago

If you spend the taxes on productive things, infrastructure, subsidies, it seems like that grows the economy directly.

Cutting taxes and spending (ie austerity) has a more mixed track record of getting out of economic recessions, in my view.

estearum4• 7 months ago

There is ample evidence that public R&D and infrastructure investments can drive massive economic growth over extremely long periods.

bruce511• 7 months ago

"Economy" is a catchall word here. The answer to your question is dependent on your definition of economy.

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.

paxys2• 7 months ago

And what about inflation?

trgn• 7 months ago

or dollar losing value

eitally• 7 months ago

Causing the dollar to devalue is a part of the strategy.

saulpw• 7 months ago

Who cares? The roaring 20s will be great!

datadrivenangel• 7 months ago

This needs to happen in order for the US to deal with its debts.

paxys2• 7 months ago

With the minor side effect that no one will be able to afford rent or groceries, but hey that's not what's important.

luke54412• 7 months ago

Only works if the US actually sells bonds and not just T-bills. Otherwise the market can just price in inflation.

GolfPopper• 7 months ago

accelerate - "To cause to move faster; to quicken the motion of; to add to the speed of." I.e. The airplane will accelerate as it plunges toward the ground.

cultofmetatron• 7 months ago

the scientific definition is merely the change in velocity. slamming your breaks would also count as accelerating from a physics perspective.

wslh• 7 months ago

This is not what the article says, so in this context is misleading.

hackable_sand• 7 months ago

Accelerate into a wall.

mupuff1234• 7 months ago

Any good hedges against a possible downfall of USD?

JumpCrisscross4• 7 months ago

Literally anything.

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.

wolvoleo• 7 months ago

RAM modules.

(Joking, don't ever take my financial advice on anything!)

why-o-why4• 7 months ago

No. I asked my RIA, and he said that scenario would destroy the world economy but also it is highly improbable (he never says "impossible", which is what I like about him). There's no place to hide if the USD craters a-la reddit-like doomsdaying (not even non-US funds).

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.

Goronmon• 7 months ago

Yeah its like when people say they are stockpiling gold in case of some form of economic apocalypse.

I'm not sure what good gold would do you if people start physically fighting each other for food and water.

gman2093• 7 months ago

Beans, boots, and bullets. You can't eat gold.

cko• 7 months ago

ex-US index funds.

Etheryte• 7 months ago

Pick any forex pair of your liking against USD?

devin• 7 months ago

I see you took a downvote. I'm not sure why. I think it's a reasonable question to be asking oneself generally, though perhaps the way you've asked it implies catastrophic near-term collapse, which I don't think is likely.

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.

bravoetch• 7 months ago

Probably not. But if I had to hedge for that I would consider property and gold.

robingchan• 7 months ago

http://archive.today/Mc86e

QuantumSeed• 7 months ago

Reminder to all Capitalists: The earth is a finite resource

christkv3• 7 months ago

Cuba is still there if you want to live in your utopia.

hsuduebc2• 7 months ago

Weird to see McCarthy roleplay in 2025.

unethical_ban2• 7 months ago

Come on, really? Criticism of current implementations of capitalism != Advocacy of the total abolition of markets.

ultrarunner• 7 months ago

“In the long run, we’re all dead”

Herring• 7 months ago

I see the pro human extinction club is still alive and kicking.

andsoitis• 7 months ago

The earth is a finite resource

The earth is our only home.

didgetmaster• 7 months ago

So...somehow communists and socialists are better stewards of the Earth's resources???

jama21113• 7 months ago

Anything that quotes the current administration’s words as if they are anything other than propaganda at best is an article than can be safely thrown straight into the trash.

AznHisoka• 7 months ago

Thanks, just saved me a few mins from reading this

fooker9• 7 months ago

What if it does work though?

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.

pavlov3• 7 months ago

Is it? Reindustrialization basically means that you want to turn the overall American economy to be more like China and less like California.

Maybe that’s good for national security (or whatever is your values-based metric), but it’s not automatically good for GDP.

hypeatei4• 7 months ago

What legislation makes you think America is going to be re-industrialized? I'm not talking about executive orders on a whim (which appear to be illegal), but actual coherent policy that creates the foundation for businesses to invest in manufacturing plants here.

lawlessone2• 7 months ago

The current administration has a stated goal to reindustrialize America

Why not go even further into the nationalist nostalgia zone?

instead of factories everyone could be working in mining, fishing and farming again...

analognoise2• 7 months ago

Did anyone actually buy the line about “industrializing America”?

It’s pretty clearly a criminal enterprise meant to enrich the president, his family, and the already wealthy.

jama21113• 7 months ago

The current administration has proven you can cry wolf or lie 19 times a day and their support barely wavers. I take their stated goals as far as I can throw them, remember when they had a stated goal to build a wall and make Mexico pay for it? lol. Don’t give them any respect they don’t deserve.

crazygringo3• 7 months ago

The Economist is quite critical of Trump. You should realize that the quote that starts the article is basically making your point -- that what's novel here is that the propaganda seems like it might actually have some truth to it for once.

agentifysh2• 7 months ago

yeah i think it was just a lazy comment, Economist has a solid track record of criticizing the Trump administration.

jama21113• 7 months ago

They’re no where near critical enough until they start calling a lie a lie.

agentifysh2• 7 months ago

while i dont think the labor market is doing well, when they start cutting rates, overall markets across the board spring back up

gruez• 7 months ago

Any comment that makes a potshot remark about the first sentence in an article, without reading the rest of the paragraph (let alone the article) can be safely thrown straight into the trash.

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.

drivingmenuts• 7 months ago

I believe both of those first sentences are true.

AnimalMuppet2• 7 months ago

You're still somewhat taking what the administration says at face value. What will be the effect of the BBB? Well, a tax cut, but also no cuts in spending, so an increase in deficits. What's the net effect of that? Is it positive or negative?

My money is net positive... at first. So yeah, maybe 2026 will be good.

vdupras• 7 months ago

Why did you put "propaganda" in quotes?

jama21113• 7 months ago

I read the whole article, and the fact that you assumed otherwise means the rest of your comment can also be safely the thrown straight into the trash.

seizethecheese• 7 months ago

You read the first line of the article only, right? Because this quote is not framed as being particularly worthy of much weight, and the rest of the article is a quite straightforward economic analysis.

jama21113• 7 months ago

No, I read the whole article. I’m allowed to have an opinion on how an article comes across with their reporting without being accused of being ignorant thank you very much.

pavlov3• 7 months ago

The administration has wrecked US economic data collection, first with indiscriminate firings across the board and then a government shutdown. Labor and inflation statistics are completely unreliable for the past three months.

websiteapi7• 7 months ago

how come trump won again? his second term is very similar to 1st.

cr125rider2• 7 months ago

Because a large number of people don’t expect people in power to blatantly lie to their face.

jama21113• 7 months ago

I suspect you’re not asking that in good faith.

cr125rider2• 7 months ago

This reads like a fake it till you make it hope piece.

jama21113• 7 months ago

Right?

Animats• 7 months ago

"Stocks have reached a permanently high plateau." - written just before the 1929 crash.

gulfofamerica• 7 months ago

It seems like we are in the foothills of the singularity. Doomsayers should be used to being disappointed.

hypeatei4• 7 months ago

This administration sucks, but it's a repeat of Trump's first term: cut taxes and keep government spending high. The Federal Reserve is also entering a QE-lite phase so more "free" money will be available for businesses to grow.

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.

thomassmith653• 7 months ago

  For all these reasons a vocal minority of analysts say that 2026 will be a year of strong economic growth

Right, a vocal minority. That is less surprising considering:

• 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

christkv3• 7 months ago

If you want to reduce imports and boost exports a plummeting USD is what you want. Why do you think China manipulates its currency to keep it weak.

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.

general1465• 7 months ago

If you want to reduce imports and boost exports a plummeting USD is what you want. Why do you think China manipulates its currency to keep it weak.

Where are all these exports going? It feels like there is very limited amount of buyers who can actually afford Made in USA.

thomassmith653• 7 months ago

  If you want to reduce imports and boost exports a plummeting USD is what you want.

Yes, that is an advantage... of people losing faith in your government and currency.

  Who are these more reliable trading partners you are talking about ?

The regions of note are Canada, Mexico, China, and the EU. Probably most nations. Think back to Trump's 'Liberation Day'... who wants to deal with that kind of... diplomacy?

  Fed does not seem to do what Trump wants.

Powell does as much of what Trump wants as he can without looking like a clown (and maybe for that reluctance, has stepped down).

  AI stuff is privately held investments with the exception of Google and Nvidia

Wall Street considers Microsoft, Google, Tesla, Meta, Nvidia, Palantir - even Apple - to be AI plays now. Those companies have private equity in Open AI, Anthropic, etc.

whatever1• 7 months ago

Accelerate producing what? And who will be consuming that "what"?

World trade is dead as we know it, cross border compute is on its last wheels. Internal median buying power is also in shambles.

password54321• 7 months ago

It sure is, been a great year... If you are part of the top 1%: https://fortune.com/2025/12/08/how-many-billionaires-does-am...

luke54412• 7 months ago

2.3% GDP growth with a 5.5% GDP budget deficit. Not great not terrible.

senshan• 7 months ago

Same old, same old:

Economist, Nov 18th 1999: Readjusting the lens (The latest statistics require a new look at America’s productivity puzzle)

https://archive.is/hXJ8A

Economist, Sep 23rd 1999: A new economy for the New World? (Inflation may not be as dead as it seems)

https://archive.is/eHeiU

hn_throwaway_99• 7 months ago

Wow, so many comments here just spouting tribal talking points without actually looking at what the article is saying.

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.

baal80spam• 7 months ago

Wow, so many comments here just spouting tribal talking points without actually looking at what the article is saying.

2 things are sure in HN comments:

1 - orange man bad

2 - AI is a bubble

throwaway-11-1• 7 months ago

“Yeah he may be a pedophile but wow have you seen Palantir’s stock price lately?”

aworks• 7 months ago

Stephen Kotkin suggests that the US share of nominal global GDP remains roughly constant, at around 25% regardless of political and policy changes. I don't know if that's right but any real change in the trend might require even more substantial policy re-work than we've had in the last 50 years. Trump II might not be that.

metadope• 7 months ago

This caught my attention:

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.

giardini• 7 months ago

Topic has turned into an anti-Trump shit-storm. Flag it!

starchild3001• 7 months ago

Despite consensus forecasts predicting a slowdown to 1.8% growth, the US economy appears poised for acceleration in 2026 driven by a potent combination of aggressive fiscal and monetary loosening. Treasury Secretary Scott Bessent’s optimism is underpinned by the implementation of the "One Big Beautiful Bill Act," which delivers retroactive tax cuts, alongside a rebound in government spending following a record 43-day shutdown and the potential for the Supreme Court to invalidate certain tariffs, resulting in significant corporate refunds. This fiscal stimulus coincides with the Federal Reserve’s pivot to lower interest rates—a trend likely to intensify as President Trump seeks to appoint dovish leadership to the central bank. While this synchronized stimulus supports bullish stock market projections and complements favorable global conditions like low oil prices, it carries significant risks of reigniting inflation and spiking long-term bond yields; nevertheless, the absence of immediate shocks suggests the economy has ample scope to outperform expectations.

nsbsh• 7 months ago

andsoitis is a cia bot. offers zero value to this site. posts random links to news articles and lots of political opinions.

America's economy looks set to accelerate

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