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Cathie Wood Predicts Economic Boom From Trump Tax Cuts: 'Reaganomics On Steroids'

MarketDash Editorial Team
19 hours ago
ARK Invest's Cathie Wood sees Trump's tax plan delivering an 8% surge in real income and igniting a historic economic recovery that could outpace Reagan-era growth.

ARK Invest CEO Cathie Wood is making some bold predictions about where the economy is headed. She's calling the incoming administration's fiscal agenda "Reaganomics on steroids" and forecasting an economic surge that could eclipse the supply-side boom of the 1980s.

The 'One Big Beautiful Bill' Breakdown

Wood recently told investors that President Donald Trump's combination of aggressive tax cuts and deregulation will create a more powerful growth engine than what Ronald Reagan unleashed four decades ago. The centerpiece? A legislative package Wood calls "OB3" (One Big Beautiful Bill).

Here's what makes it interesting, according to Wood: the tax cuts are retroactive rather than phased in. That addresses one of the biggest criticisms of Reagan's approach, which took time to gain momentum. "We think this is Reaganomics on steroids," Wood said, pointing to provisions that eliminate taxes on tips and overtime pay while reducing taxes on Social Security benefits.

The bill also doubles the State and Local Tax (SALT) deduction cap from $10,000 to $20,000, which is significant news for anyone living in high-tax states. That's real money back in people's pockets.

An 8% Income Boost on the Horizon?

The numbers Wood is citing are eye-catching. Based on data from Piper Sandler, she projects that real disposable personal income—the money you actually have to spend after accounting for inflation—could grow at roughly an 8% annualized rate in the coming quarters.

This aligns with Trump's Thanksgiving comments to U.S. service members, where he suggested that massive tariff revenues might allow the federal government to "substantially" cut or even eliminate income tax entirely. Wood noted that the budget deficit is already shrinking, with about two-thirds of a $350 billion reduction coming from tariff inflows.

From Rolling Recession to Rolling Recovery

Wood's thesis is that these fiscal measures are hitting at exactly the right moment. She believes the economy is shifting from what she calls a "rolling recession" to a "rolling recovery." Yes, employment numbers have been weak, but Wood argues that increased liquidity combined with the One Big Beautiful Bill will create a market "swish" heading into year-end and set up a prosperous 2026.

The market's reaction on Tuesday was more subdued. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 respectively, both closed lower in premarket trading. SPY declined 0.30% to $683.63, while QQQ dropped 0.19% to $624.28. Futures for the major indices were trading mixed.

Whether Wood's optimistic forecast plays out remains to be seen, but she's clearly betting big on the stimulative power of retroactive tax cuts and deregulation. If she's right, we're looking at an economic acceleration that could rival or exceed anything we saw during the Reagan years. If she's wrong, well, at least people will have a bit more money in their paychecks to cushion the disappointment.

Back to News

Cathie Wood Predicts Economic Boom From Trump Tax Cuts: 'Reaganomics On Steroids'

MarketDash Editorial Team
19 hours ago
ARK Invest's Cathie Wood sees Trump's tax plan delivering an 8% surge in real income and igniting a historic economic recovery that could outpace Reagan-era growth.

ARK Invest CEO Cathie Wood is making some bold predictions about where the economy is headed. She's calling the incoming administration's fiscal agenda "Reaganomics on steroids" and forecasting an economic surge that could eclipse the supply-side boom of the 1980s.

The 'One Big Beautiful Bill' Breakdown

Wood recently told investors that President Donald Trump's combination of aggressive tax cuts and deregulation will create a more powerful growth engine than what Ronald Reagan unleashed four decades ago. The centerpiece? A legislative package Wood calls "OB3" (One Big Beautiful Bill).

Here's what makes it interesting, according to Wood: the tax cuts are retroactive rather than phased in. That addresses one of the biggest criticisms of Reagan's approach, which took time to gain momentum. "We think this is Reaganomics on steroids," Wood said, pointing to provisions that eliminate taxes on tips and overtime pay while reducing taxes on Social Security benefits.

The bill also doubles the State and Local Tax (SALT) deduction cap from $10,000 to $20,000, which is significant news for anyone living in high-tax states. That's real money back in people's pockets.

An 8% Income Boost on the Horizon?

The numbers Wood is citing are eye-catching. Based on data from Piper Sandler, she projects that real disposable personal income—the money you actually have to spend after accounting for inflation—could grow at roughly an 8% annualized rate in the coming quarters.

This aligns with Trump's Thanksgiving comments to U.S. service members, where he suggested that massive tariff revenues might allow the federal government to "substantially" cut or even eliminate income tax entirely. Wood noted that the budget deficit is already shrinking, with about two-thirds of a $350 billion reduction coming from tariff inflows.

From Rolling Recession to Rolling Recovery

Wood's thesis is that these fiscal measures are hitting at exactly the right moment. She believes the economy is shifting from what she calls a "rolling recession" to a "rolling recovery." Yes, employment numbers have been weak, but Wood argues that increased liquidity combined with the One Big Beautiful Bill will create a market "swish" heading into year-end and set up a prosperous 2026.

The market's reaction on Tuesday was more subdued. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 respectively, both closed lower in premarket trading. SPY declined 0.30% to $683.63, while QQQ dropped 0.19% to $624.28. Futures for the major indices were trading mixed.

Whether Wood's optimistic forecast plays out remains to be seen, but she's clearly betting big on the stimulative power of retroactive tax cuts and deregulation. If she's right, we're looking at an economic acceleration that could rival or exceed anything we saw during the Reagan years. If she's wrong, well, at least people will have a bit more money in their paychecks to cushion the disappointment.