The most widely predicted recession from President Trump’s tariffs and his One Big Beautiful Bill deficits still has not happened. 

Actually, we’re going the other way.

The Atlanta Fed’s GDP Now tracking model shows Quarter 2 growth up an enormous 4.6 percent annually. Consumer spending has been revised upward to 4.6 percent from 3.8 percent. Capital equipment spending was revised up to 8.8 percent  from 5.1 percent. There is a boom going on in business investment.

Meanwhile, the widely expected tariff related stock market crash has turned out to have all the makings of a new bull market. In May, the S&P 500 index turned in its best performance since 1990.

And I think it has a lot to do with the enormous tax incentives in the One Big Beautiful Bill.

 Here’s what the Senate majority leader, John Thune, said yesterday:

“There are different ideas in some cases with respect to some of the savings and whether or not we can achieve a higher level. And I think too on some of the tax stuff, for sure the question of permanence, particularly on the business taxes which is where you get the pro-growth. That’s where you get the additional revenue that comes with the growth dividend.”

Mr. Thune has the story exactly right. And, then, let’s not forget the much-heralded inflation spike that has yet to materialize.

In fact, the Fed’s favorite PCE inflation indicator has now slipped to 2.1 percent over the past year, nearly hitting their 2 percent target.

 Of course, the liberal press will not admit that they have been completely wrong on the Trump economy. Instead, they are doubling down on their pessimistic mantra.

Mr. Trump, though, is doubling down on his One Big Beautiful Bill. And he is right to do so.

Last night, he made a powerful case for the bill on Truth Social, saying:

“We will take a massive step to balancing our Budget by enacting the largest mandatory Spending Cut, EVER, and Americans will get to keep more of their money with the largest Tax Cut, EVER, and no longer taxing Tips, Overtime, or Social Security for Seniors — Something 80 Million Voters supported in November.”

The bill, he added, “will unleash American Energy by expediting permitting for Energy, and refilling the Strategic Petroleum Reserve… It will kick millions of Illegals off Medicaid, and make sure SNAP is focused on Americans ONLY! It will also restore Choice and Affordability for Car purchases by REPEALING Biden’s EV Mandate, and all of the GREEN NEW SCAM Tax Credits and Spending.”

I’m sorry that Elon Musk has decided to take potshots at the bill, especially after Mr. Trump gave him such a graceful send-off in the Oval Office. Yet all of Elon’s waste, fraud, and abuse discoveries will be rescinded in numerous bills over time.

And, as far as the battle over budget deficits, there are estimates all over the place. The Congressional Budget Office, Penn Wharton, Tax Foundation, House Budget Committee, and others.

So, I’m going to assume the official White House budget, when it comes out, will project something like 2.7 percent growth over the next ten years.

At that pace, budget deficits will turn into a budget surplus by the end of the planning period, somewhere between $1 to $2 trillion.

That’s where Mr. Thune got it completely right when he talked about the additional revenue that comes with a growth dividend from huge supply-side incentives — especially for making the business tax cuts permanent.

From Mr. Kudlow’s broadcast on Fox Business Network.