When President Donald Trump dismissed the abysmal first-quarter economic performance by blaming it on his predecessor, he may have been right to do so. Now that a sizable chunk of the current administration’s policies is traversing through the economy, the latest data released yesterday, January 8, suggests the Trumponomics 2.0 agenda could be winning, which could set up a yuge 2026.
Trumponomics in the Data
A flurry of economic data came through the pipeline during the first full business week of 2026. White House officials probably performed the iconic Trump dance while reading the numbers.
Worker productivity went gangbusters as everyone enjoyed the warm summer weather. Nonfarm productivity, which economists liken to the secret sauce that powers the national economy, soared 4.9% during the third quarter, according to the Bureau of Labor Statistics. This topped the market consensus of 3% and represented the best quarterly print since the third quarter of 2023. What’s more, the second-quarter figures were revised higher, from 3.3% to 4.1%.
President Trump’s target, the trade deficit, narrowed sharply to its lowest level since the Great Recession. In October, the goods and services trade gap plunged 39% to $29.4 billion, the lowest since June 2009. This was driven by a 2.6% increase in exports and a 3.2% drop in imports.
On the labor front, the number of Americans filing for unemployment benefits came in below economists’ expectations. For the week ending January 3, initial jobless claims rose to 208,000, from 200,000 in the previous week. However, the key metric is the four-week average because it removes the week-to-week volatility, and it fell steeply to below 212,000.
Planned layoffs ended 2025 lower. Global outplacement firm Challenger, Gray and Christmas reported that US-based employers announced 35,553 job cuts in December, down 50% from November and 8% lower than the same time in the previous year. This was the lowest monthly total since July 2024.
While talk of a “low fire, low hire” climate persisted in the latest employment conditions, the situation could pick up this year. The Challenger data found that employers announced more than 10,000 new hires in December, the highest number for the month since 2022, up 31% from December 2024.
A summary of other data points: Manufacturing prices, business activity and employment in the services sector strengthened, the 30-year mortgage rate declined to 6.25%, and used car prices edged up just 0.1% last month. Of course, it was not all sunshine and lollipops during the busy week of numbers: Job openings declined to 7.146 million, consumer inflation expectations ticked up to 3.4%, and manufacturing activity weakened.
Overall, if the US economy could be graded on this data alone, when adjusted for the Trumponomics agenda, it would receive a solid B-plus.
A Bullish Future
On top of the statistics, a chorus of economic observers has revised its 2026 forecasts upward.
The Atlanta Fed’s widely watched GDPNow Model estimate, for example, now indicates fourth-quarter growth will be a whopping 5.4%. If accurate, this would be up from the second quarter’s 3.8% and the third quarter’s 4.3%.
Fitch Ratings, for instance, raised its estimate of US GDP growth this year to 2%, up from the previous projection of 1.9%. While the country is still waiting for the fourth-quarter gross domestic product, the market consensus for expansion is around 3%.
Matthew Martin, a senior economist at Oxford Economics, told CNBC that if these productivity numbers persist, economic growth prospects could accelerate without inflation. “Productivity will be key to determining the economy’s speed limit and inflationary dynamics,” he said. “If productivity growth continues to accelerate due to tax cuts, deregulation, and technological advancements, including AI, economic growth can pick up without causing unwanted inflation.”
Treasury Secretary Scott Bessent has repeatedly stated that the United States will see non-inflationary growth, unlike during the previous administration.
Midterms
For months, administration officials have urged Americans to be patient, as the Trumponomics 2.0 agenda will take full effect in 2026. Over the coming year, the One Big Beautiful Bill, further Federal Reserve interest rate cuts, and the stability of President Trump’s tariff regime could be reflected in solid economic growth.
This is something the White House says will benefit Main Street and Wall Street. Will it be enough for the Republican Party to continue holding the keys to Congress in November? It’s always the economy, stupid – and it will be no different over the next ten months.
