[Arthur Herman] America’s coming boom

Where is America going?

It depends on who you listen to.

Some pundits see its economic outlook as gloomy, if not disastrous. They point out that the affordability issue, i.e. that Americans sense they are paying more for less, isn’t going away; the election of a socialist as mayor of New York City who campaigned precisely on that issue, indicates the opposite. And although the recent government shutdown has ended, President Trump’s economics chief Kevin Hassett predicts it will mean it cuts fourth quarter GDP growth in half — from a projected three percent growth to perhaps one and a half percent. Meanwhile, annual inflation remains stubbornly high, hovering just under three percent.

As for Trump’s effort to raise tariffs, its fate now hangs in the balance in the US Supreme Court. An unfavorable ruling could throw Trump’s recent international trade deals into serious doubt. Meanwhile, America’s leading tech corporations are cutting jobs on every side, with many blaming AI for the employment losses.

According to The Economist/YouGov’s latest tracking poll, 62 percent of independent American voters now say the economy is “getting worse,” the highest level since the summer of 2022. NYU economist Laurence White says Trump can no longer blame his predecessor Joe Biden for his economic woes: “It’s his economy now,” White says, with ill-disguised relish.

In fact, White is correct — but not in the way he imagines. The truth is, for the last nine months Trump has been busily laying the foundations for an American economic boom in 2026. In so doing, he is also creating an international economic and technological order in which allies like ROK can participate as partners, not clients; while China is increasingly left in the cold and dark.

An investment boom in the US economy is already underway, primarily driven by the rapid buildout of AI infrastructure. Nvidia chief executive Jensen Huang estimated on the company’s latest earnings call that between $3 trillion to $4 trillion will be spent on AI infrastructure by the end of the decade, especially for construction of data centers and related hardware.

But there’s also been a stunning rise in capital expenditure across the business landscape. Those expenditures grew by 14.8 percent in the first half of 2025 compared with the same period in 2024, according to the Bureau of Economic Analysis. It’s the biggest non-pandemic gain since 2011.

But one of the most overlooked data points is non-capital business spending, which includes investment in intellectual property such as software and on research and development. That number is up 11.9 percent this year from same time frame in 2024. That kind of investment sets the table for future innovation-based growth, which means future hirings as well.

Why is this happening? Companies like Johnson & Johnson have cited lower corporate taxes and deductions on domestic R&D expenses promised in Trump’s so-called “big, beautiful” tax reduction bill, as well as the expansion of a manufacturing investment tax credit. In September, in fact, Johnson & Johnson chief executive Joaquin Duato announced an additional $2 billion investment in its North Carolina facility, on top of the previously announced $55 billion it committed for US operations for the next four years.

In fact, real business investment in manufacturing structures has increased sharply since late 2022, boosting GDP growth, according to the Peterson Institute for International Economics. Some of this boom is due to the CHIPS and Science Act passed in 2022, which poured $52 billion into boosting US semiconductor production and other tech manufacturing.

But Trump’s tax bill has added more fuel to business investment by allowing more tax credits for inshore investing — companies are deciding that investing in US-based production makes sense in order to reduce reliance on foreign sources and make their supply chains more secure, especially for critical technologies — and a provision for one hundred percent depreciation expensing, including for manufacturing equipment.

The tax advantages in Trump’s bill aren’t just for companies and corporations. The same tax bill brings substantial tax savings for ordinary Americans through tax breaks such as limiting taxes on Social Security and ending taxes on overtime and tips. This means people will have more personal income to spend and invest — perhaps as much as $200 billion next year.

Then there’s Trump tariff boom. Contrary to the experts, it hasn’t triggered an international trade war. Instead, it has resulted in a series of negotiated agreements with countries like South Korea, which have boosted federal revenues but also brought a cascading series of new trading and foreign investment arrangements, both public and private, totaling some $17 trillion on paper.

Today the US is the number one destination globally for foreign direct investment. Some of the deals Trump has reached, are staggering.

From the Arab Emirates, a $1.4 trillion investment framework in the US over a decade. With Qatar, an agreement to generate a $1.2 trillion "economic exchange" and a $600 billion "investments and trade" commitment with Saudi Arabia.

Japan meanwhile has agreed to invest $550 billion into American industries, particularly in energy and semiconductors, while South Korea has pledged up to $350 billion in investment into US industries, with an additional commitment for energy purchases.

This latter deal is part of the American energy boom that’s also coming.

Already the United States is producing 14 million barrels a day, while Trump is coordinating with his Middle East partners like the Saudi to keep energy costs low around the globe. US natural gas exports have increased by about 25 percent this year, with the US Energy Information Administration natural gas exports, which are set to rise by another 10 percent in 2026.

More than half of America’s fifty states have now seen gas prices drop below $3 a gallon (under President Biden the national average reached $5 in June 2022). All in all, lower gasoline costs for Americans means lower transportation costs, which means lower costs for everything. That may not guarantee any future price drops for consumers, but it will be a serious check on any inflation still left in the system.

That energy policy is also heavily focused on boosting the electrical power needed to sustain and expand the country’s AI boom. As we noted in a previous column, the investment firm Goldman Sachs estimates that the growth of AI data centers could raise global electrical power demand by as much as 165 percent by 2030. The Trump administration is hoping to meet that demand by expanding the use of nuclear power. It wants America to have 10 new large nuclear reactors under construction by 2030.

All this means that AI/ML in America will have the power it needs to boost productivity across the economy, spawning new jobs in every sector that benefits, from infrastructure construction to manufacturing.

There’s also an American cryptocurrency boom coming, as the Trump administration looks to streamline regulation and ease the use of crypto as an investment vehicle. Trump has also issued an executive order supporting the creation of more dollar-backed stablecoins by private firms, in order to reinforce the dollar's global role. Far from seeing the shift to crypto as a threat to the dollar, the Trump team see crypto working side by side with a strong dollar i.e. as a source of economic stability as well as maintaining the dollar as the world’s reserve currency.

Undermining that reserve status has been a key Chinese geopolitical strategy, with initiatives like the digital yuan and the push for creating a BRICS currency. Unfortunately for Beijing, that strategy has backfired. The alternative to the dollar has turned out to be not the digital yuan or even the Euro, but gold. As the world’s largest holder of gold (8,133.46 tons compared to China’s 2,303.51 tons), the United States is well positioned to take advantage of the “gold rush” that’s currently underway in global markets.

The other half of China’s strategy for displacing US economic dominance has been to monopolize critical minerals, particularly rare earths. This time, Beijing showed its hand too soon. Its threat of a worldwide export ban galvanized a Trump policy of creating alternate rare earth supply chain, including deals with key allies like Australia and Japan, and international partners like Malaysia, Thailand, and Vietnam.

For now, China still controls 90 percent of the world's rare earths processing. In two or three years, however, thanks to Trump and the United States, that monopoly may be slipping away.

Meanwhile, China’s economy is not looking so strong, either — certainly by comparison with the American outlook in 2026.

China struggles with overproduction and weak domestic demand. It’s in the midst of a real estate crisis, and chronic uncertainty about job security with a stubbornly high youth unemployment rate (now at 17percent). The economy that was supposed to dominate the 21st century, is looking very shaky. The fact is, a command economy like Communist China cannot compete with the kind of open, innovative, and competitive economy the US is reconstructing, including in technology and manufacturing — and one that also brings opportunities for America’s partners.

Here Korea is perfectly poised to join in the coming boom, given its expertise in advanced electronics, semiconductors (including memory chips), telecommunications equipment, and machine tools. Korea is also one of the key countries with whom Trump has signed an AI cooperation agreement, alongside Japan and the Arab Emirates, that will help to prevent China from dominating the global AI landscape.

As for commercial and naval shipbuilding — an area where the United States urgently needs help, especially vis a vis China’s surging maritime output — South Korea can bring enormous expertise and scalability to America’s shipyards.

Korea can also show the US a thing or two about quantum communications, with companies like Samsung and SK Telecom demonstrating how to make vital infrastructures safe and secure, including against future quantum computer attacks.

In the bad old days of the 1970’s and 1980’s, when economic growth seemed destined to be a zero-sum game, US was engaged in a more or less permanent struggle with surging Asian economies like Japan and South Korea, for market dominance. Now the advanced democracies are realizing they have to work together in everything from advanced technologies to supply chains, in order to keep the 21st century from becoming “the Chinese century” — which would be a net loss for everyone.

And America’s coming economic boom will lead the way.

Arthur Herman

Arthur Herman is a senior research fellow at the Civitas Institute at the University of Texas, Austin. The views expressed here are the writer’s own. — Ed.