President Donald Trump’s trade war

As concerns over President Donald Trump’s trade war loom large, the latest earnings season offers a reassuring glimpse into corporate America’s robust economic standing. Despite the pervasive anxiety surrounding tariffs, companies have managed to shift their focus towards more promising prospects, leading to a largely optimistic investment climate.

In a recent research note, Jan Hatzius, Chief Economist at Goldman Sachs, encapsulates this sentiment with a potent observation: “Animal spirits over tariffs.” This assertion highlights a significant shift in focus from short-term trade uncertainties to long-term economic drivers. According to Hatzius, excluding the typically volatile energy sector, real revenues have climbed by 3.2% year-over-year in the fourth quarter, buoyed by steadfast consumer spending.

This earnings season has not only been about robust revenue figures but also about the broader implications of a lax regulatory framework under the Trump administration. The easing of regulations is poised to bolster corporate optimism, paving the way for heightened capital expenditure (capex). Hatzius notes that while deregulation may not serve as an immediate catalyst, the overall environment contributes to a sharp improvement in capex expectations for 2025, reinforcing an above-consensus view on capital investments.

One of the most telling indicators of this uptrend is the performance of the Institute for Supply Management’s purchasing managers’ index in manufacturing, which soared to its highest level in two years last month. This uptick is not an isolated phenomenon but a part of a broader trend indicating increased business investments.

Looking ahead, Hatzius predicts a 5% growth in business investment for the current year. This optimism is driven by an increase in spending on new factories and cutting-edge technologies like artificial intelligence. Moreover, favorable tax incentives and lower short-term borrowing rates for small businesses are expected to further fuel this growth.

The clear takeaway from Hatzius’s analysis is that corporate America’s optimism isn’t just surviving; it’s thriving, powered by a strategic focus on upcoming opportunities rather than current challenges. As businesses continue to invest and expand, the economic landscape for 2025 looks not only promising but also indicative of a resilient and forward-thinking corporate sector.

This narrative serves as a beacon for investors and stakeholders, suggesting that the path forward, though potentially bumpy, is lined with substantial growth and innovation opportunities. As we move deeper into the year, it will be interesting to see how this blend of optimism and investment translates into economic reality.