Surging US economy defies worries over turbulent Trump

{"text":[[{"start":7.751,"text":"The US economy is in the throes of an investment boom, with the latest growth figures confirming that a spending splurge by businesses has so far survived nearly two years of turbulence under the Trump administration."}],[{"start":19.8,"text":"The world’s largest economy expanded at an annualised rate of 3.4 per cent over the third quarter, led by an annualised 12.7 per cent rise in non-residential fixed investment, spending by businesses and governments on capital excluding housing, data showed last month."}],[{"start":37.16,"text":"Despite market volatility in the tech sector underlining the precarious nature of an economy driven by AI, the investment surge has so far confounded expectations that an unpredictable climate under Trump would derail growth."}],[{"start":50,"text":"“I don’t want to say investment is everything, but it’s almost everything,” says Joe LaVorgna, chief economist at SMBC Nikko Securities America, adding that the AI build-out was one of the largest investment booms “going all the way back to the railroads”."}],[{"start":64.88,"text":"AI remains the dominant driver behind the upswing in investment, with vast data centre construction projects across the country emblematic of the role the technology has played in boosting growth."}],[{"start":76.04,"text":"Some economists and market participants warn the tech companies driving the boom may have overextended investors."}],[{"start":null,"text":""}],[{"start":82.76,"text":"Worries over AI were highlighted in recent weeks by Alphabet’s loss of $500bn in market value in one single trading day after it emerged the company’s cash flow had fallen deeper into negative territory. The company spent $50bn over three months as part of its AI build-out."}],[{"start":100.14,"text":"Market volatility continued after the sweeping Democrat victories in the November midterms. Newly elected Democrats have pledged to stop data centre building."}],[{"start":108.76,"text":"The key question now is whether the investment surge can be maintained despite the Federal Reserve’s tightening monetary policy and uncertainty over Big Tech spending on AI."}],[{"start":118.36,"text":"The Fed is widely expected to raise borrowing costs by a quarter point in December to tackle the surge in energy prices triggered by the Iran war after increasing rates for the first time in three years in September."}],[{"start":130,"text":"Joe Brusuelas, chief economist at accounting and consulting firm RSM US, says while the major hyperscalers, such as Amazon and Meta, would likely “roll right through” further rate increases, other parts of the AI ecosystem would “probably not”."}],[{"start":144.28,"text":"“It’s a brand-new industry evolving in front of us, and we just don’t have the deep knowledge to really come to hard conclusions,” Brusuelas adds."}],[{"start":153.48,"text":"Fed chair Kevin Warsh, meanwhile, has stressed that the US’s strong investment growth is not just AI-driven."}],[{"start":null,"text":""}],[{"start":159.44,"text":"“It is convenient to say that the strength of the economy is all about this new technology wave,” Warsh said in October. “In fact, if we look at the data . . . the capex story is not just robust, not just strong, but is broadening.”"}],[{"start":174.84,"text":"Figures from the Bureau of Labor Statistics, which show the US economy has added 72,000 manufacturing jobs over the course of 2026 after years of decline, support Warsh’s view, though at 12.7mn the number remains lower than when US President Donald Trump took office in January 2025."}],[{"start":194.84,"text":"The Trump Administration’s tariff policies — imposing levies not only on America’s rivals but on its allies too — initially fed fears among foreign governments and investors that the US would become too precarious for businesses to invest in."}],[{"start":209.28,"text":"But these worries failed to materialise, largely because companies, governments and investors see the US as too large a customer base or trade partner to ignore."}],[{"start":219.82,"text":"Foreign direct investment in the US rose $266bn last year, hitting $5.86tn by the end of 2025. And Audi, the German carmaker, announced in October it will establish its first US production site in Georgia. The move is part of a $4bn investment that the company says will create 4,500 jobs."}],[{"start":241.48,"text":"“The United States is one of the world’s most important premium markets and we have not yet realised our full potential,” said Gernot Döllner, chair of the carmaker’s management board, in the October announcement. “This is about building a stronger Audi business in America — not only about building a factory.”"}],[{"start":259.44,"text":"And despite market uncertainty over AI, many economists think hyperscalers will continue to bet on the new technology because of the potential for huge pay-offs. It also helps that Trump is one of the sector’s biggest supporters and favours light regulation."}],[{"start":272.96,"text":"Even with a public backlash against data centres and newly elected Democrat governors pledging to stop construction, companies may judge that the environment under Trump is more favourable than under a future president, says Vincent Reinhart, a former Fed official who is now chief economist at asset management firm BNY Investments."}],[{"start":292.64,"text":"“Uncertainty is clearly high [around policy] and uncertainty is usually bad for investment,” he says. “But if you’re building the data centre, you also probably figure the environment right now is more conducive today than it will be tomorrow.”"}],[{"start":307.08,"text":"LaVorgna, a former adviser to Treasury secretary Scott Bessent, also stresses the administration’s “pro-growth tax policy and regulatory policy” as an important factor in the investment boom."}],[{"start":null,"text":""}],[{"start":319.4,"text":"The One Big Beautiful Bill Act, for instance, restored tax breaks allowing businesses to immediately deduct the full cost of investments in equipment bought and installed after January 19 2025."}],[{"start":331.56,"text":"“Yes, there’s been uncertainty. Some of that is self-inflicted,” LaVorgna says. “But it just speaks to the dynamism [of the US economy].”"}],[{"start":null,"text":""}],[{"start":345.37,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794461569_6249.mp3"}