‘I think that we could see growth and productivity well in excess of 3 percent for the coming year,’ the Treasury secretary said.
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.
The CapEx Comeback driven by the One Big Beautiful Bill is how societies get richer.
— Treasury Secretary Scott Bessent (@SecScottBessent) July 24, 2025
In President Trump’s America, we’ll unleash a productivity boom, drive massive growth, and pay down the debt. pic.twitter.com/789dcIbeBP
“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.
By Andrew Moran
