Cathie Wood, CEO of ARK Invest, is doubling down on her bullish outlook for the U.S. economy, predicting a surge in productivity and a broader market recovery driven by artificial intelligence, tax cuts, and deregulation.
In her latest “In the Know” podcast, Wood described the U.S. as nearing the end of a “rolling recession”—an economic downturn she believes has persisted since the Federal Reserve began raising interest rates in 2022.
Her forecast comes at a critical moment. The Atlanta Fed’s GDPNow indicator suggests a 3% contraction in real GDP for the first quarter of 2025, marking a sharp downturn.
Despite these indicators, Wood remains optimistic, arguing that technological advancements and fiscal policy changes will create the most significant productivity gains in history.
Crypto’s Role in a Shifting Economic Landscape
One of the most striking takeaways from Wood’s analysis is her assertion that regulatory shifts will catalyze a revival in cryptocurrency innovation.
Following the departure of SEC Chair Gary Gensler, she noted that “crypto innovation in the United States” has seen a resurgence. Wood claimed that industry leaders, previously hesitant to engage with U.S. investors due to regulatory uncertainty, are now returning to the domestic market.
“The administration is celebrating the digital asset revolution,” Wood said, referencing a White House event featuring crypto industry figures. She suggested deregulation will open the floodgates for digital asset investment, making the U.S. more competitive in global crypto markets.
This optimism aligns with broader market trends. Bitcoin’s resilience and increasing institutional adoption have signaled renewed confidence in digital assets, even as traditional markets struggle with economic uncertainty. However, skepticism remains over whether the Trump administration’s deregulatory stance will benefit the sector in the long run.
Trump’s Fiscal Policy and Market Expectations
Wood also praised the Trump administration’s proposed $4.5 trillion tax cut, which passed the House budget committee. It would come alongside an extension of the $1.9 trillion Tax Cuts and Jobs Act (TCJA) provisions set to expire this year. Wood argued that these cuts—potentially retroactive to January 2025—could inject new momentum into the economy.
She pointed to the lessons from the Reagan administration, arguing that phased-in tax reductions could delay economic growth, while immediate cuts could stimulate investment and spending. However, critics question whether the proposed tax strategy will be sustainable given the country’s rising deficit.
The impact on inflation remains uncertain. Wood contends that rising productivity, particularly in AI and digital technologies, will drive economic expansion while curbing inflation. “Productivity is a powerful antidote to inflation,” she said, predicting that real GDP growth could climb to 7.3%, more than doubling historical averages.
Beyond tax policy, Wood highlighted deregulation as a major economic driver. The administration’s stance on reducing government oversight is already reshaping several sectors, including cryptocurrency, biotech, and mergers and acquisitions.
Under the new policy framework, 10 existing regulations must be removed for every new regulation introduced. Wood believes this aggressive rollback will create a “productivity boom” and allow smaller firms to thrive, particularly in the digital asset space. She also suggested that corporate acquisitions, previously limited by regulatory barriers, will surge, providing essential capital to innovation-driven startups.
However, critics remain wary. The economic trajectory of Trump’s first term saw significant tax cuts and an increasing national debt, prompting concerns that the current strategy could have long-term consequences.
Wood’s firm, ARK Invest, has historically bet heavily on disruptive innovation, including AI, genomics, and cryptocurrency. She predicted that the next market cycle would favor these industries over the dominant “Magnificent Seven” tech stocks, which have seen their valuations skyrocket over the past five years.
Data from ARK suggests that while the Mag 7 tripled in value, other innovation stocks only saw a 30% appreciation. “We think that’s going to flip,” Wood said, arguing that fear-driven markets will soon shift toward neglected innovation sectors.
AI adoption is another focal point. Wood shared data showing ChatGPT’s continued dominance in daily active users but noted that competitors like Elon Musk’s Grok are rapidly gaining traction. She emphasized the growing trend of open-source AI models, such as Meta’s Llama, and suggested that they could reshape the competitive space.
