ARK Invest CEO Cathie Wood is forecasting a historic economic boom driven by the incoming administration's fiscal policies, describing the landscape as “Reaganomics on steroids.”
The ‘OB3’ Stimulus Package
In a recent update to investors, Wood argued that the combination of aggressive tax cuts and deregulation under President Donald Trump will create a more powerful growth engine than the 1980s era of supply-side economics.
Wood's optimism centers on the legislative package she referred to as “OB3” (One Big Beautiful Bill). According to Wood, the bill's “smartest” feature is making tax cuts retroactive rather than phasing them in—a lesson learned from the delays that slowed the initial impact of the 40th President Ronald Reagan's policies.
“We think this is Reaganomics on steroids,” Wood said, highlighting specific provisions such as the elimination of taxes on tips and overtime pay, and a reduction in taxes on Social Security benefits.
She also noted the doubling of the State and Local Tax (SALT) deduction cap from $10,000 to $20,000, which offers significant relief to residents in high-tax states.
See Also: Trump To Provide $12 Billion Aid To Farmers Hit By Tariff Policies: Report
Boosting Real Income
The potential impact on consumer wallets is substantial. Citing data from Piper Sandler, Wood projected that with the proposed tax relief, real disposable personal income—money available after inflation—could grow at an annualized rate of roughly 8% in the coming quarters.
This dovetails with President Trump’s Thanksgiving comments to U.S. service members, where he hinted that massive tariff revenues could allow the U.S. to “substantially” cut or even eliminate federal income tax.
Wood confirmed that the budget deficit is already shrinking, attributing roughly two-thirds of the $350 billion reduction to tariff inflows.
A Rolling Recovery
Wood believes these fiscal injections are arriving just as the economy transitions from a “rolling recession” to a “rolling recovery.”
While acknowledging weak employment numbers, she argues that increased liquidity and the “One Big Beautiful Bill” will fuel a market “swish” into the end of the year, setting the stage for a prosperous 2026.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed lower in premarket on Tuesday. The SPY was down 0.30% at $683.63, while the QQQ declined 0.19% to $624.28, according to Benzinga Pro data.
On Tuesday, the futures of the S&P 500, Nasdaq 10, and Dow Jones indices were trading mixed.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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