Setting aside geopolitical developments related to Iran, the American economy continues to show significant strength, according to Larry Kudlow. The Dow Jones Industrial Average closed at a new record high of 53,178.

The Institute for Supply Management (ISM) released its manufacturing index, which came in well above consensus estimates, marking its seventh consecutive month of gains — a streak not seen in years. The ISM Manufacturing PMI is a widely followed economic indicator based on a monthly survey of purchasing managers across the United States, gauging activity in new orders, production, employment, supplier deliveries, and inventories. Readings above 50 signal expansion in the sector, while those below 50 indicate contraction. According to Kudlow, every major survey category — including new orders, production, employment, and order backlogs — showed strength in the latest report.

From a policy perspective, Kudlow pointed to two key factors driving what he described as a manufacturing renaissance. First, he cited the "One Big Beautiful Republican Bill," which provides for immediate 100 percent expensing of business investments, encompassing the semiconductor, connectivity, and power-networking sectors. Second, he argued that tariffs have redirected businesses toward domestic production and away from offshoring, crediting this observation to John Carney. The tariff argument remains a subject of ongoing debate, as some industry groups have cautioned that duties on imported inputs can raise costs for downstream manufacturers, even as others point to reshoring incentives.

The manufacturing data follows a GDP report that Kudlow characterized as "badly misunderstood." While the headline figure showed 1.5 percent annualized growth, he noted that underlying economic components — specifically consumer spending and business investment — grew at a 3.9 percent annual rate. Business equipment investment, he added, rose by more than 15 percent on an annualized basis.

Kudlow also highlighted that unemployment claims remain at record lows and that hiring is increasing rather than contracting, countering what he described as "AI doomsters" who have warned of technology-driven job losses. The U.S. dollar remains strong, which he suggested could help ease inflationary pressures.

He attributed the broader economic gains to a manufacturing and artificial-intelligence-driven productivity boom, resulting in rising corporate profits, lower economy-wide costs, and the Dow's record close of 53,178.