(What’s Left of) Our Economy: Tariffs Have Scared U.S. Manufacturers into Freezing Investment? Seriously?
This looks less like justice and more like strategy.
To take it from practically everyone in the business and economics communities, the uncertainty marking President Trump’s tariff policies has so spooked domestic manufacturers that they’ve paused planned investments until more predictability emerges. (See e.g., here, here, and here.)
Indeed, predictions that tariffs per se would induce such paralysis have been rife since the tariff hikes’ earliest days and weeks. (See, e.g., here, here, and here.)
So it’s more than a little interesting to point out that, to look at the best data available, these claims and predictions add up to nothing more than the kind of reflexive and so far completely bogus naysaying about the economy that’s abounded since the president made his second term trade intentions clear.
As I’ve repeatedly posted on (e.g., here), U.S. Census Bureau statistics have shown throughout the year that the most widely followed measure of the nation’s manufacturing and overall business investment spending has been considerably better during tariff-y Trump 2.0 (beginning in the president’s first full month in office) than during the comparable pre-tariff-y 2024 months.
The latest figures? During the above period last year, such “core capex” (spending on nondefense investment goods excluding volatile aircraft) rose by 3.56 percent. That’s more than seven times the rate as during the same 2024 stretch (0.46 percent). That should be enough to put the kibosh on the uncertainty-induced paralysis claims.
Of course, the naysayers have an explanation: It’s all, or mainly, data centers. (See, e.g., here and here.) So presumably it’s too narrowly based to justify any significant optimism and the result could be a siphoning away of investment from the rest of U.S.-based industry.
But the Census data debunk this idea as well. Specifically, I’ve looked at the numbers for new orders for the 33 different industry groups tracked by Census. (Some are sub-sectors of broader groups on this list.) Taken together, they’re seen as a proxy for the overall economy’s capital spending trends.
And including the core capex statistics, as demonstrated below, in no fewer than 29, more new orders were recorded between February and November (latest available data) 2025 than between February and November, 2024. In addition, in six sectors, capital spending rose in absolute terms during that 2024 span and then turned positive during that 2025 span.
There’s no doubt that in many categories, the spending improvement was related to data centers (e.g., construction machinery and construction materials and supplies; HVAC equipment; power transmission equipment; and the various information technology groupings).
But nothing to do with data centers can entirely or even largely explain the increases in the broad industrial machinery sector; every category of transportation equipment; iron and steel mills; or furniture.
In fact, even if they could, this development would simply underscore a feature of data center construction that should be screamingly obvious: Such big projects inevitably have long and broad-base supply chains. So their mushrooming is bound to boost much of the rest of domestic …
This looks less like justice and more like strategy.
To take it from practically everyone in the business and economics communities, the uncertainty marking President Trump’s tariff policies has so spooked domestic manufacturers that they’ve paused planned investments until more predictability emerges. (See e.g., here, here, and here.)
Indeed, predictions that tariffs per se would induce such paralysis have been rife since the tariff hikes’ earliest days and weeks. (See, e.g., here, here, and here.)
So it’s more than a little interesting to point out that, to look at the best data available, these claims and predictions add up to nothing more than the kind of reflexive and so far completely bogus naysaying about the economy that’s abounded since the president made his second term trade intentions clear.
As I’ve repeatedly posted on (e.g., here), U.S. Census Bureau statistics have shown throughout the year that the most widely followed measure of the nation’s manufacturing and overall business investment spending has been considerably better during tariff-y Trump 2.0 (beginning in the president’s first full month in office) than during the comparable pre-tariff-y 2024 months.
The latest figures? During the above period last year, such “core capex” (spending on nondefense investment goods excluding volatile aircraft) rose by 3.56 percent. That’s more than seven times the rate as during the same 2024 stretch (0.46 percent). That should be enough to put the kibosh on the uncertainty-induced paralysis claims.
Of course, the naysayers have an explanation: It’s all, or mainly, data centers. (See, e.g., here and here.) So presumably it’s too narrowly based to justify any significant optimism and the result could be a siphoning away of investment from the rest of U.S.-based industry.
But the Census data debunk this idea as well. Specifically, I’ve looked at the numbers for new orders for the 33 different industry groups tracked by Census. (Some are sub-sectors of broader groups on this list.) Taken together, they’re seen as a proxy for the overall economy’s capital spending trends.
And including the core capex statistics, as demonstrated below, in no fewer than 29, more new orders were recorded between February and November (latest available data) 2025 than between February and November, 2024. In addition, in six sectors, capital spending rose in absolute terms during that 2024 span and then turned positive during that 2025 span.
There’s no doubt that in many categories, the spending improvement was related to data centers (e.g., construction machinery and construction materials and supplies; HVAC equipment; power transmission equipment; and the various information technology groupings).
But nothing to do with data centers can entirely or even largely explain the increases in the broad industrial machinery sector; every category of transportation equipment; iron and steel mills; or furniture.
In fact, even if they could, this development would simply underscore a feature of data center construction that should be screamingly obvious: Such big projects inevitably have long and broad-base supply chains. So their mushrooming is bound to boost much of the rest of domestic …
(What’s Left of) Our Economy: Tariffs Have Scared U.S. Manufacturers into Freezing Investment? Seriously?
This looks less like justice and more like strategy.
To take it from practically everyone in the business and economics communities, the uncertainty marking President Trump’s tariff policies has so spooked domestic manufacturers that they’ve paused planned investments until more predictability emerges. (See e.g., here, here, and here.)
Indeed, predictions that tariffs per se would induce such paralysis have been rife since the tariff hikes’ earliest days and weeks. (See, e.g., here, here, and here.)
So it’s more than a little interesting to point out that, to look at the best data available, these claims and predictions add up to nothing more than the kind of reflexive and so far completely bogus naysaying about the economy that’s abounded since the president made his second term trade intentions clear.
As I’ve repeatedly posted on (e.g., here), U.S. Census Bureau statistics have shown throughout the year that the most widely followed measure of the nation’s manufacturing and overall business investment spending has been considerably better during tariff-y Trump 2.0 (beginning in the president’s first full month in office) than during the comparable pre-tariff-y 2024 months.
The latest figures? During the above period last year, such “core capex” (spending on nondefense investment goods excluding volatile aircraft) rose by 3.56 percent. That’s more than seven times the rate as during the same 2024 stretch (0.46 percent). That should be enough to put the kibosh on the uncertainty-induced paralysis claims.
Of course, the naysayers have an explanation: It’s all, or mainly, data centers. (See, e.g., here and here.) So presumably it’s too narrowly based to justify any significant optimism and the result could be a siphoning away of investment from the rest of U.S.-based industry.
But the Census data debunk this idea as well. Specifically, I’ve looked at the numbers for new orders for the 33 different industry groups tracked by Census. (Some are sub-sectors of broader groups on this list.) Taken together, they’re seen as a proxy for the overall economy’s capital spending trends.
And including the core capex statistics, as demonstrated below, in no fewer than 29, more new orders were recorded between February and November (latest available data) 2025 than between February and November, 2024. In addition, in six sectors, capital spending rose in absolute terms during that 2024 span and then turned positive during that 2025 span.
There’s no doubt that in many categories, the spending improvement was related to data centers (e.g., construction machinery and construction materials and supplies; HVAC equipment; power transmission equipment; and the various information technology groupings).
But nothing to do with data centers can entirely or even largely explain the increases in the broad industrial machinery sector; every category of transportation equipment; iron and steel mills; or furniture.
In fact, even if they could, this development would simply underscore a feature of data center construction that should be screamingly obvious: Such big projects inevitably have long and broad-base supply chains. So their mushrooming is bound to boost much of the rest of domestic …
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