How can the US economy achieve 3% growth? UBS: Capital expenditures, labor force improvement, and fiscal adjustments are key.

UBS's latest research report pointed out that the US economy is expected to maintain a growth rate of around 3% in the next several quarters. This optimistic expectation is mainly based on three pillars: strengthening capital expenditure, structural improvements in the labor market, and adjustments in fiscal policy. According to Joseph Lavorgna, UBS's US Treasury Secretary advisor, capital expenditure has achieved a significant growth of 13%-14% in the first half of the year. With the continued stimulus of tax incentives policies (such as 100% expensing of capital expenditures and building structures), this growth momentum is expected to continue into the second half of the year. It is worth noting that the improvement in capital formation efficiency is seen as a key factor driving productivity growth. The annual productivity growth rate is expected to stabilize at 2% or slightly lower level, providing substantial support for economic growth. In terms of the labor market, the report reveals the core logic supporting the expectation of 3% growth. Lavorgna points out that labor supply growth will stabilize in the range of 0.7% to 0.8%, which not only depends on the domestic birth rate but also benefits from optimized legal immigration policies and increased participation rates of the elderly. On the specific policy level, measures such as abolishing tip taxes, overtime taxes, and adjusting social security benefits are creating positive incentives for the labor market. Data shows that the US fiscal budget had a surplus of approximately $20 billion in June this year, an improvement of nearly $90 billion from the same period last year. The repeal of student loan forgiveness policies is expected to save approximately $150 billion in government spending this year, providing fiscal space for the expansion of the labor market. Addressing market controversies, the report clearly refutes the pessimistic predictions of the Congressional Budget Office (CBO). Lavorgna believes that the CBO's underestimation of productivity growth and labor growth forecasts have a double deviation, while actual data shows that productivity growth is closer to 2% and labor growth can reach 0.7% to 0.8%, resulting in a 3% GDP growth rate. On the issue of inflation and tariffs, the report emphasizes that the majority of tariff costs have already been absorbed by exporters, and the impact on domestic price levels in the US is only reflected in a one-time adjustment. Criticism is given to some Federal Reserve officials' complex reasoning about "tariffs generating secondary effects through inflation expectations." On the policy level, besides tax incentives, the government is accelerating infrastructure investment through simplifying the building permit process. Recent spending bills targeting 100% expensing policies in areas such as factories and data centers are targeted measures to address the long-term weakness in US structural investments. Although a specific figure for the relief of the fiscal deficit from tariff revenue is not provided, combined with the improvement in budget surplus and expenditure optimization, the fiscal deficit is expected to be significantly smaller than last year. In conclusion, UBS has demonstrated through a triple logic of policy driving, market support, and fiscal adjustment, the path for the US economy to achieve 3% growth. The core lies in exchanging short-term fiscal stimulus for long-term productivity improvements, consolidating economic resilience through structural transformation.