This morning, the Bureau of Economic Analysis released preliminary figures for July. The headline figures that you’re probably seeing are things like “3% GDP growth for Q2” or something to that effect. This is true, but also highly misleading. These images, both courtesy of Doug Irwin over on X, are extremely prescient.
The point is: it’s easy to get high growth rate when you cause chaos and disarray for the first three months… and then ease off.
Talking Points
Today’s GDP release is a good one, especially for those of us who have been warning about the dangers of tariffs for the last 6 months.
They confirm exactly one thing: that markets respond positively to stability and negatively to chaos and capriciousness.
Trump has all the makings of a president who can fundamentally transform the economy
Consumer spending and investment are both softer than expected.
We also see declining exports, reflecting an overall sentiment that the rest of the world is trying to find ways to avoid doing business with the US.
In fact, straight from the report itself:
Within exports, the decrease primarily reflected a decrease in goods, led by automotive vehicles, engines, and parts.
Call me crazy, but that doesn’t sound like progress in the manufacturing sector, especially when Trump held a rally in Michigan promising the return of the auto industry.
The truth is that all these claims about “record breaking stock market performance” and whatnot might be true. But the point is that things almost certainly would have been even better had we not gone through the first six months of “thoughts and feelings” coming out of the Administration on trade.