Trump is right, the US economy is booming

 At Davos, President Trump said:

Growth is exploding, productivity is surging, investment is soaring, incomes are rising, inflation has been defeated. We are the hottest country anywhere in the world.

His remarks drew jeers from his detractors. 

Well, he's right.

In Q4, US gdp growth is projected at 5.4 per cent, according to the Atlanta Federal Reserve. Jason Furman, Harvard Professor and former Chairman of the President's Council of Economic Advisors is quoted as saying:

“Most advanced economies would be thrilled to have the US growth numbers." 

Which is more or less what Trump said at Davos. 

We have the IMF's revised forecasts for the world economy and the US. 

The world economy is projected to grow at 3.3 per cent in 2025, a shade below the growth rate of 3.4 per cent in 2024. US gdp will grow at 2.1 per cent, higher than the 1.8 per cent forecast last April (although below the unusual growth rate of 2.8 per cent in 2024).

Here's the juicy part: global growth and US growth are not one-off things in the face of tariffs- it's not that advance stocking by importers, implementation of tariffs late in the calendar year and absorbing of costs by importers have cushioned growth for one year. 

In 2025, global growth will again be 3.3 per cent and the US economy is projected to accelerate to 2.4 per cent (according to Goldman Sachs, to 2.8 per cent).

So, the doomsayers have been proved wrong for now about the impact of Trump tariffs- neither the world economy nor the US economy is collapsing. As Gillian Tett, FT commentator, puts it:

When Trump unleashed policy “rupture” a year ago, it sparked gloomy economic predictions. However, as the president crowed at Davos, the American economy is booming in 2026, due to a mixture of monetary, fiscal and regulatory stimulus.