America’s Blue Collar Boom & Manufacturing Renaissance

Summary

Morning Wire: America’s Blue Collar Boom & Manufacturing Renaissance
Released on July 27, 2025

In this insightful episode of Morning Wire, presented by Daily Wire Editor-in-Chief John Bickley and co-host Georgia Howe, the discussion centers on the remarkable resurgence of America's manufacturing sector and the significant boom in blue-collar industries. Featuring a comprehensive interview with Joe Lavornia, Counselor to the Treasury Secretary, the episode delves deep into the driving forces behind the current economic landscape, the impact of recent legislation, and the broader implications for American workers and the economy.

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Surge in Business Investment and Capital Expenditures

Georgia Howe opens the episode by highlighting recent Federal Reserve data indicating a substantial increase in business investments. This surge in capital expenditures is likened to the peak of the late 1990s tech boom, signaling a robust transformation in the U.S. economic fabric.

Notable Quote:

"The latest data from the Federal Reserve shows a stunning uptick in capital expenditures, one that rivals the heights of the late 90s tech boom."
— Economic Analyst [00:31]

The One Big Beautiful Bill and Its Economic Impact

Joe Lavornia provides an in-depth analysis of the "One Big Beautiful Bill," a pivotal piece of legislation that has spurred the current wave of business investments. He explains how retroactive expensing and other pro-growth policies embedded within the bill have incentivized companies to invest heavily in capital projects.

Notable Quote:

"The equipment production rose at a 23% rate. Not surprisingly, when we got the GDP data, we saw a 24% increase—really, really strong, really exciting news."
— Joe Lavornia [01:55]

Lavornia emphasizes that the bill's passage has created a favorable environment for sustained growth in capital spending, reinforcing the burgeoning blue-collar sector and heralding a manufacturing renaissance.

Manufacturing Renaissance and Re-Industrialization

The discussion underscores a significant shift towards re-industrialization, with policies fostering a manufacturing renaissance in the United States. Lavornia attributes this resurgence to a combination of deregulation, stable tax policies, and incentives for energy production, which collectively make the U.S. an attractive destination for manufacturing investment.

Notable Quote:

"Really, it's a re-industrialization, it's a manufacturing renaissance. It's what President Trump accurately describes as a golden era."
— Joe Lavornia [04:04]

Tariffs, Inflation, and Pricing of Tariff-Sensitive Goods

Addressing concerns about tariffs and their impact on inflation, Lavornia explains that despite economists' expectations, there has been minimal inflationary pressure from tariff-sensitive goods. He attributes this to lower-than-anticipated pricing platforms from major trade partners like China.

Notable Quote:

"Inflation is a monetary phenomenon. We're seeing inflation expectations come down."
— Joe Lavornia [05:43]

Regional Manufacturing Trends and Concerns

While the national data paints a positive picture, Cabot Phillips raises concerns about regional disparities, specifically citing a dramatic decrease in manufacturing activity in the Mid-Atlantic region. Lavornia acknowledges these pockets of softness but maintains that the overarching data remains robust, suggesting that localized issues do not undermine the broader positive trends.

Notable Quote:

"The hard data is very strong... We clearly show a V-shaped recovery in Capex."
— Joe Lavornia [07:17]

Corporate Investments and Job Shoring

Lavornia highlights significant corporate commitments to relocating manufacturing operations to the U.S., citing AstraZeneca's half-trillion-dollar investment as a prime example. He attributes this influx of investment to the certainty provided by the newly passed bill, coupled with favorable tax policies and President Trump's negotiation efforts.

Notable Quote:

"They're capital commitments that will occur over time... It's a much fairer, much more America first trade situation."
— Joe Lavornia [08:04]

Investor Optimism vs Public Skepticism

The episode juxtaposes the optimistic outlook of investors, evidenced by record highs in the S&P 500 and robust global market performance, against the skepticism prevalent among the general public. Lavornia addresses this disconnect by pointing to tangible economic indicators, such as rising blue-collar wages, which he argues will eventually resonate with and be reflected in public perception.

Notable Quote:

"Blue collar wages... we've seen a 1.2% increase in the first six months of President Trump's term. That's the second fastest all time."
— Joe Lavornia [09:37]

Federal Reserve Review and Treasury Secretary's Actions

The discussion touches upon President Trump's criticism of Federal Reserve Chair Jerome Powell, particularly regarding the Fed's ongoing renovation project. Lavornia notes that Treasury Secretary Scott Bessant is conducting a comprehensive review to eliminate any potential waste or inefficiency within the Fed's operations.

Notable Quote:

"If it looks like there's cost overruns that can't be justified, they need to look at it."
— Joe Lavornia [10:52]

Underreported Positive Factors and Future Outlook

Lavornia brings attention to the often underreported benefits of current economic policies, such as the need for lower interest rates to bolster sectors like manufacturing and housing. He underscores that while interest rates are currently high, leading to some softening in specific areas, the overarching trends remain positive with expectations of continued growth as policies take full effect.

Notable Quote:

"President Trump's policies... are focused on middle and lower income people. They need lower interest rates to be able to afford a home."
— Joe Lavornia [11:18]

Conclusion

The episode concludes on an optimistic note, with Lavornia reaffirming his belief that the U.S. is entering a golden era of economic growth driven by strategic investments, favorable policies, and a renewed focus on manufacturing and blue-collar industries. Despite some regional and sectoral challenges, the data collectively points towards a strong and sustained economic resurgence.

Final Notable Quote:

"You’re going to see it reflected in all sorts of numbers."
— Joe Lavornia [09:37]

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Key Takeaways:

• Capital Expenditure Surge: Recent Federal Reserve data indicates a significant rise in business investments, paralleling the late '90s tech boom.
• Legislative Impact: The "One Big Beautiful Bill" has been pivotal in creating a pro-growth environment, fostering a manufacturing renaissance.
• Re-Industrialization: Policies encouraging deregulation, stable taxes, and energy production are driving a resurgence in U.S. manufacturing.
• Inflation Insights: Contrary to expectations, tariffs have not led to significant inflation in tariff-sensitive goods, partly due to favorable pricing from trade partners.
• Corporate Investment: Major companies are committing vast investments to shore up manufacturing in the U.S., benefiting American workers.
• Economic Optimism vs Public Perception: While investors remain optimistic, public skepticism exists, though indicators like rising blue-collar wages offer hope for broader confidence.
• Future Outlook: Continued growth is anticipated as policies solidify, with a focus on manufacturing and housing sectors potentially benefiting from lower interest rates in the future.

This episode provides a comprehensive overview of the current economic trends shaping America's blue-collar sectors and manufacturing landscape, offering listeners a nuanced understanding of the forces driving this renaissance.

Transcript

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[Economic Analyst]

A surge in business investment is reshaping the US Economic landscape. The latest data from the Federal Reserve shows a stunning uptick in capital expenditures, one that rivals the heights of the late 90s tech boom.

[Georgia Howe]

In this episode, we speak to Joe Lavornia, counselor to the Treasury Secretary, to help us unpack what this investment means for the economy. I'm Georgia Howe with Daily Wire executive editor John Bickley. It's Sunday, July 27th, and this is Morning Wire.

[Joe Lavornia]

Meet Flip.

[Economic Analyst]

She's one half of a Flip flop.

[Joe Lavornia]

That's me.

[Economic Analyst]

Who got left behind at Celebration Key, Carnival's exclusive paradise in Grand Bahama.

[Georgia Howe]

Uh, I chose to stay here. It really is paradise.

[Economic Analyst]

So now Flip spends her time lounging.

[Cabot Phillips]

On the beach, swimming in the lagoon and eating.

[Georgia Howe]

The only thing more impressive than my appetite are all the dining options.

[Joe Lavornia]

Yeah.

[Economic Analyst]

Have you tried food service to your cabana?

[Joe Lavornia]

Ooh, yum. Flip. Where'd she go?

[Cabot Phillips]

Book your cruise.

[Economic Analyst]

Vacation to Carnival. Celebration Cay. A paradise you'll want to lose yourself in. Ship's registry, the Bahamas and Panama. The following is an interview between Joe Lavornia, counselor to the Treasury Secretary, and senior editor Cabot Phillips.

[Cabot Phillips]

Hey, Joe, thanks again for coming on. Always a pleasure to have you.

[Joe Lavornia]

Yeah, sure. Thanks for having me.

[Cabot Phillips]

So I want to talk to you about some new numbers coming from the Federal Reserve showing a significant increase in the US Production of business equipment. Now give us some context on why that is a good sign for the economy and what this means for average Americans.

[Joe Lavornia]

The Federal Reserve provides industrial production figures every month, and one of the details is often overlooked in the market, and that is production of business equipment. That series is an excellent proxy for what economists call capex, or capital spending, which essentially measures all the things that firms invest in to help produce more of the goods and services that people want. It could be computers, software, things of that sort of. And what we observed in the first quarter is that the equipment production rose at a 23% rate. Not surprisingly, when we got the GDP datas, we saw a 24% increase really, really strong really exciting news. We think that is a result of the One Big beautiful bill which had retroactive expensing to Inauguration Day. So companies getting very excited about the pro growth policies that President Trump was putting forward took that initiative in the first quarter. Increased production of business equipment. We saw that in the GDP accounts. Importantly though, in Q2, we saw another large gain in business equipment production, up almost 11%. That is a really strong increase following a boom in the first quarter. What that means is before the One Big beautiful bill became legislation, we had an almost 17% annualized increase over those two quarters of business equipment production. That is remarkable. Excluding the pandemic, that is the fastest two quarter gain since the last two quarters of 1997 during the heart of the Internet boom. So what we're seeing now is businesses react in anticipation of the bill. The bill now is passed, which means that we're going to see a much higher glide path, much more growth in capital spending, which means it's going to reinforce this blue collar boom we've been seeing. This is all very consistent with what President Trump has wanted and with Secretary and has helped push through.

[Cabot Phillips]

So as you mentioned, this trend actually started back in quarter one. That was before the big beautiful bill had passed, when we weren't even sure if it was going to pass. So what are some other reasons that we could be seeing this trend taking place beyond just this bill?

[Joe Lavornia]

Well, we certainly, I mean, it's possible that we could have seen, you know, maybe 11% Q2Q gain is fantastic. Maybe it would have been even stronger if people took President Trump at his word and realized he was going to get the bill done on July 4th. The bill contains a lot of other positive progress policies, such as faster permitting as it relates to energy production, the ability of energy producers to tap federal waterways and land for drilling, which is something they couldn't do under the previous administration, essentially making it much easier to conduct business with low and stable tax rates that are now permanent. It's encouraging people to spend. And this Bill also includes 100% expensing if you build a new plant. That wasn't the case in the first bill. So it's even better. So if you want to build things, you want foreign capital to come in, which is what's happening in large part because the tariffs have incentivized countries to come in and companies to come into the U.S. well, they're going to have cheap and abundant energy, they're going to have a much friendlier regulatory backdrop. And if you're a US Producer, you're going to be able to expense that factory you wouldn't have been able to do before. So really it's a re industrialization, it's a manufacturing renaissance. It's what President Trump accurately describes as a golden era. I believe we're upon that happening and this capex comeback is consistent with it.

[Cabot Phillips]

So if you go through the Fed data, one thing that caught my eye was the lack of increase in tariff sensitive goods. Economists have been saying that those products in particular would see a large price increase over the last few months. That clearly is not happening. So give our listeners some context on what tariff sensitive goods are and in your view why those prices are not increasing.

[Joe Lavornia]

So there are some products that might have a tariff effect. It's very hard to figure out what the tariff effect is in large part because the economists for five months in a row have been saying there's going to be inflation in the data. And we had four months in a row where the data on the CPI surprised to the downside. The fifth month was in line but then we had very good PPI and import price data. If you look hard enough you could find almost anything. What we know is broadly speaking in the latest PPI data and in the import price data that followed, there was virtually no inflation at all coming from China, which as you know was our largest. We were in the largest deficit with China. And without question we know that the pricing platform generally speaking has been much lower than expected. So I would argue that going forward the likelihood we see acceleration in inflation to what people think extraordinarily low. And if at some point there is a an adjustment is a one off price level adjustment. This is not something that will self perpetuate. Inflation is a monetary phenomenon. We're seeing inflation expectations come down. We know interest rates are historically high for reasons that have nothing to do with trade. But we do expect the backdrop to improve.

[Cabot Phillips]

We've talked quite a bit on the show about all of the positive signs regarding the US economy, but there are some concerning trends as well. For example, we saw this week that manufacturing in the mid Atlantic region here at home has decreased dramatically. So what is causing that trend in particular?

[Joe Lavornia]

I would say the broad data look really good. There's always going to be these pockets of softness and some of these more qualitative metrics have been weaker depending on which one you're looking at. But that's not really the hard data. The hard data is very strong. The bill now is done. So the forward to us is very positive and especially we've already seen this big Capex improvement. So I would focus on the big picture and this harder data which clearly shows a V shaped recovery in Capex.

[Cabot Phillips]

President Trump campaigned on a promise to bring investments from around the world here to the US to benefit the American workers and our economy. And that has happened. We've seen trillions of dollars worth of investments pouring in on shoring of jobs and manufacturing. We saw AstraZeneca just this week announce a half trillion dollar investment. Why is that happening? What is driving that?

[Joe Lavornia]

You just mentioned one company and there have been many others. I don't know if it's 2 trillion, 3 trillion, 4 trillion. They're capital commitments that will occur over time. This is why though we needed the bill to be passed because it made permanence to tax changes. So there's some clarity on what tax policy would be. It's hard to make a spending decision. Your tax rate is going to be. So that's part of it. Again, that includes deregulation, energy encouragement, energy encouraged production. Those are all incentives to come in. And of course it's overlaid with the tariff and also President Trump's negotiating skill. It all fits together. You know, different companies are going to move at a different pace. Trade deals are still being negotiated. We expect much more good news to come in the months ahead. And you're going to see a much fairer, much more America first trade situation. @ the same time, you're getting manufacturing reindustrialization in a way that's going to benefit the middle and lower income worker, which was a hallmark of President Trump's first set of policies. And it's coming back in even a bigger way this time around.

[Cabot Phillips]

We've definitely seen investors take a more rosy outlook on the economy. If you look at the numbers, the S&P 500 hitting record highs, Dow gaining ground, global markets in Asia and Europe also picking up steam. So they're clearly optimistic. But if you look at polling data, it seems like Americans are more skeptical about President Trump's handling of the economy. He's double digits underwater right now on that issue, lower than at any point in his first term. So what's your message to Americans who might not be all that confident right now in President Trump's economic strategy?

[Joe Lavornia]

You know, looking at the polling, I'd always be careful because I think some polls can be very inaccurate. What we've been highlighting are a couple of things, of course, the fact that in the first six months of President Trump's term, blue collar wages, which are technically what are known as non supervisory production Workers, you know, the backbone of the labor market. We've seen a 1.2% increase in the first six months of President Trump's term. That's the second fastest all time, only behind the first six months of President Trump's first term. 1.3% gain. Now, with the one big beautiful bill in place, the capex comeback that we're seeing, that will only continue to foster and galvanize further gains in wages that was going to show up in people's take home pay, bigger paychecks, better jobs. And that ultimately is going to lead to what President Trump rightly calls the golden era. And you're going to see it reflected in all sorts of numbers.

[Cabot Phillips]

So switching gears a bit, President Trump has made no secret that he's not a fan of Federal Reserve Chair Jerome Powell. He is calling for an investigation into the Fed's renovation project, which has gone well over budget. And now your boss, Treasury Secretary Scott Bessant, is conducting a thorough review of the Federal Reserve that goes beyond just that renovation project. What exactly is he looking for?

[Joe Lavornia]

We'll have to wait and see. I mean, clearly there is a focus on this administration of eliminating waste, abuse and fraud and whatever projects there are that the government's involved in. If it looks like there's cost overruns that can't be justified, they need to look at it. So I think it's a very prudent, thorough approach. We'll see what the results bring.

[Cabot Phillips]

Final question. There's a lot to talk about in the economy, but give us something that you think is being under discussed, under reported, that gives you reason for optimism.

[Joe Lavornia]

Yeah, sure. I think they know about it. But I would say, and this is what President Trump has talked about, interest rates. Interest rates are high and the housing market is certainly soft. First time affordability is historically low. President Trump's policies, we know from what he's done on the wage side, benefit all Americans. And in particular are centric or focused on middle and lower income people. And they need lower interest rates to be able to afford a home. And you mentioned some qualitative manufacturing surveys. To the extent that interest rates are high, that's also at the margin going to dampen manufacturing. So if you want to look at areas of the economy that could do better if rates were lower, manufacturing, housing would be the two most obvious places to look.

[Cabot Phillips]

All right, we will leave it there. Joe, thank you so much for coming on.

[Joe Lavornia]

Thank you.

[Georgia Howe]

That was Daily Wire senior editor Cabot Phillips speaking with Joe Lavornia. And this has been a weekend edition of morning wire.