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U.S. economy grew at a 3% rate in Q2, a better-than-expected pace even as Trump’s tariffs hit

Jredbaron96 said:
If you want to argue that technically tariffs don't lead to inflation, okay.

But all Trump's first terms tariffs actually accomplished were increased prices and job losses.

econofact.org

Steel Tariffs and U.S. Jobs Revisited | Econofact

The 2018 tariffs raised domestic steel prices, putting downstream U.S. manufacturing firms at a disadvantage relative to foreign competition.
econofact.org econofact.org
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With all the opposition facing Trump during his first term, he wasn't able to implement his entire process. That is changed this time around.

btw, the CPI did NOT increase substantially during that time.
 
MTAtech said:
If you look under the hood, the GDP growth figure was driven by a sharp drop in imports. Remember, GDP = Consumption + Investment + Government Spending + Net Exports (exports minus imports).
The metric to look at is consumer spending, which nose dived.

fredgraph.png
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Why does your graph stop at May?

It would be nice if you provided a link to your graphic.
 
Mycroft said:
Trump proved, back in 2018-2019 that tariffs do not necessarily increase inflation and the US has a LOT of room to grow manufacturing without increasing inflation.

To believe age old notions about the nature of inflation is to do a disservice to America.
Click to expand...

And to put unsupported hopes before experience is to do a disservice to one's own brain - starting with making unsupported assumptions about the inflation rate proved anything in regards to a tariffs that only affected a few nations, primarily China, and were much smaller than those proposed (and some accepted) recently.

Besides, be reminded that the average inflation rate for the three years prior to Trump was 1.1 percent but after three years of Trump it rose to an average 2.1, that is until the COVID downturn of 2020.

Still, it is presumptuous to assume that the 1 percent increase in inflation was due to Trump's tariff policy (after all, he also increased deficit spending from his tax "cut" in the same period.) However, it is even more nonsensical to assume that these INCREASED numbers could mean that tariffs had no effect on inflation under Biden (who maintained the tariffs).

In sum, as everyone knows, whatever effects it had or may of had is washed out the tsunami consequences of both Covid and then the very reckless expansion of the money supply.

As for "old" ideas, perhaps you should read up on the history of economics, starting with Mercantilism. Here's a timeline of old to modern - showing who of us is actually dated:

15th–18th C. Mercantilism – Trade surplus, bullionism, state control, tariffs. Figures: Thomas Mun, Colbert Legacy: Colonialism, protectionism (TRUMPER ECONOMICS)

18th C. Physiocracy – Agriculture as wealth, natural order Figure: Quesnay Legacy: First economic flow model

1776–Mid 19th C. Classical Economics – Free markets, labor theory of value Figures: Adam Smith, Ricardo, JS Mills, Malthus Legacy: Capitalism’s foundation

Mid–Late 19th C. Marxian Economics – Class struggle, surplus value Figure: Karl Marx Legacy: Socialist theory, critique of capitalism

1870–1930 Neoclassical Economics – Marginal utility, equilibrium Figures: Jevons, Menger, Walras, Marshall Legacy: Mathematical modeling, consumer focus

1930s–1970s Keynesian Economics – Aggregate demand, fiscal stimulus Figure: J.M. Keynes Legacy: Macroeconomics, welfare state

1970s–1990s Monetarism & New Classical – Money supply, rational expectations Figures: Stigler, Sowell, Friedman, Knight, Lucas Legacy: Central bank independence

1980s–Present New Keynesian Economics – Sticky prices, DSGE models Figures: Mankiw, Blanchard, Taylor, Feldstein, Calvo Legacy: Dominant macro framework in policy

I've bolded the conservatives and classical liberals associated with these developments who all uniformly rejected tariffs and TRUMPER's very arcane thinking.
 
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anatta said:
UE came down a bit as well.. all good
  • Gross domestic product jumped 3% for the second quarter, better than the 2.3% estimate and reversing a 0.5% decline in the prior period.
  • Consumer spending rose 1.4% in the second quarter, better than the 0.5% in the prior period.
  • While exports declined 1.8% during the period, imports fell 30.3%, reversing a 37.9% surge in Q1.
  • President Donald Trump responded to the GDP report with a fresh demand for the Federal Reserve to lower interest rates.
“The anti Trump story has been that we’re going to have a recession or a depression because of the tariffs, which are going to jack up prices and cause consumers to run for the exits” Kevin Hassett, National Economic Council director, said on CNBC. “In fact, every single thing about this GDP release has shown strength.”

Trump has been complaining about high mortgage rates, which have held back the housing market. Residential investment fell 4.6% in Q2.

At the same time, GDP posted its strong rise without help from government spending. Federal outlays declined 3.7%, coming off a 4.6% drop in the first quarter.
State and local government spending rose 3%.
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This is not reflective of Trump's tariff regime.
 
If strong financials were expected going forward my financial advisor would have called me to suggest I convert many of my risk-free investments back into equities. I'm happy to hear some decent news but I'm not jumping up and down yet.
 
Mycroft said:
With all the opposition facing Trump during his first term, he wasn't able to implement his entire process. That is changed this time around. btw, the CPI did NOT increase substantially during that time.
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It increased significantly, post 203.
 
Callen said:
I know that Trumpers are eager to spin this but if one puts politics aside and listen to the economists , this is not a good report other than the headline number. If it was a good report the markets would be reacting positively but it's basically flat.

The Q2 numbers were skewed by a significant drop in imports caused by the significant increase in them Q1. most economists are saying the real numbers are a blend of Q! and Q2. However, looking past the top number economists are concerned becasue bot consumer spending and Core GDP are weak. Good news is if this trend continues Powell will lower rates next go around.


"Consumer spending, which powers about 70% of the US economy, picked up sharply in the second quarter to a 1.4% rate, up from the anemic 0.5% in the first quarter. But, combined with the previous data, it marks the two slowest quarters of spending since the pandemic. Meanwhile, businesses slowed their spending sharply during the same period, to 1.9% from 10.3%, mostly reflecting a recalibration from the front-running earlier in the year.

Still, the economy isn’t out of the woods and things could take a turn for the worse: A key gauge of underlying demand in the economy — real final sales to private domestic purchasers, also referred to as “core GDP” — slowed in the second quarter to an annualized rate of 1.2%, the weakest pace since the fourth quarter of 2022, down from 1.9% earlier in the year.


“Headline numbers are hiding the economy’s true performance, which is slowing as tariffs take a bite out of activity,” Kathy Bostjancic, chief economist at Nationwide, said in commentary issued Wednesday. “If core GDP performance continues at this pace, we expect there will be even more pressure on the Fed to lower rates as the economy slows.”
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Thank you for posting something that is actually factual rather pulling it out of your ass and acting like you are the only one that has all the financial answers.
 
dseag2 said:
If strong financials were expected going forward my financial advisor would have called me to suggest I convert many of my risk-free investments back into equities. I'm happy to hear some decent news but I'm not jumping up and down yet.
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You should have been piling into equities back in May. They are a bit pricey now.
 
Fletch said:
You should have been piling into equities back in May. They are a bit pricey now.
Click to expand...
I've piled into equities for over 30 years. I'm not hurting and have no need to rush back in. I made great returns on equities in 2023 and 2024 and can now settle for decent returns on my CDs and Treasuries. Thanks for being concerned about me though.
 
maxparrish said:
And to put unsupported hopes before experience is to do a disservice to one's own brain - starting with making unsupported assumptions about the inflation rate proved anything in regards to a tariffs that only affected a few nations, primarily China, and were much smaller than those proposed (and some accepted) recently.

Besides, be reminded that the average inflation rate for the three years prior to Trump was 1.1 percent but after three years of Trump it was rising an average 2.1, that is until the COVID downturn of 2020.

Still, it is presumptuous to assume that the 1 percent increase in inflation was due to Trump's tariff policy (after all, he also increased deficit spending from his tax "cut" in the same period.) however, it is even more nonsensical to assume that these INCREASED numbers could mean that tariffs had no effect on inflation under Biden (who maintained the tariffs).

In sum, as everyone knows, whatever effects it had or may of had is washed out the tsunami consequences of both Covid and then the very reckless expansion of the money supply.

As for "old" ideas, perhaps you should read up on the history of economics, starting with Mercantilism. Here's on a timeline of old to modern - showing who is dated:

15th–18th C. Mercantilism – Trade surplus, bullionism, state control, tariffs. Figures: Thomas Mun, Colbert Legacy: Colonialism, protectionism (TRUMPER ECONOMICS)

18th C. Physiocracy – Agriculture as wealth, natural order Figure: Quesnay Legacy: First economic flow model

1776–Mid 19th C. Classical Economics – Free markets, labor theory of value Figures: Adam Smith, Ricardo, JS Mills, Malthus Legacy: Capitalism’s foundation

Mid–Late 19th C. Marxian Economics – Class struggle, surplus value Figure: Karl Marx Legacy: Socialist theory, critique of capitalism

1870–1930 Neoclassical Economics – Marginal utility, equilibrium Figures: Jevons, Menger, Walras, Marshall Legacy: Mathematical modeling, consumer focus

1930s–1970s Keynesian Economics – Aggregate demand, fiscal stimulus Figure: J.M. Keynes Legacy: Macroeconomics, welfare state

1970s–1990s Monetarism & New Classical – Money supply, rational expectations Figures: Stigler, Sowell, Friedman, Knight, Lucas Legacy: Central bank independence

1980s–Present New Keynesian Economics – Sticky prices, DSGE models Figures: Mankiw, Blanchard, Taylor, Feldstein, Calvo Legacy: Dominant macro framework in policy

I've bolded the conservatives and classical liberals associated with these developments who all uniformly rejected tariffs and TRUMPER's very arcane thinking.
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First, Trump goals and actions are not based on "unsupported hopes". They are based on well thought out goals and tactics.

Second, you...like others...do not understand the purpose of Trump's tariffs and that is why you all are consistently wrong with your predictions.

Trump's tariffs are primarily a tool to bring nations to the negotiating table. After that, the resulting deals...with various tariffs...are designed to reverse the one-sided trade imbalances that have existed...some for almost 80 years. They are also designed to spur investment in the US and to deter Chinese transshipment.

When you are wedded to old ideas and are faced with new ideas, goals and tactics you end up getting it all wrong, as we saw with these latest GDP numbers.
 
By the way, for those who don't know about John Taylor, a brief intro: in 1993 he introduced the "Taylor Rule", an empirical and modeling derived tool for determining the interest rate that will deliver full employment and stable output with minimal inflation. His goal, as an economist, was to create a tool to guild policy makers on the setting of rates and to minimize the pull it from their ass decisions based on politics (eg Donald Trump).

While the fed has deviated on the rule on occasion, as a whole it should be followed as it enhances predictability and reduces subjectivity (eg Donald Trump).

Now retired, and a fellow at the Hoover Insitute, he writes on his blog:

Is Monetary Policy Sufficiently Restrictive?​

Posted on June 8, 2023 by John Taylor
The President of the Federal Reserve Bank of St. Louis, James Bullard, posted a very clear analysis of this question, addressing whether the Federal Reserve had raised the federal funds interest rate enough. The title of his analysis is what I used to title this blog.

His analysis is based primarily on the Taylor Rule. He concludes that the federal funds rate is just barely high enough: https://www.stlouisfed.org/publicat...e/is-monetary-policy-sufficiently-restrictive.

I recommend this piece. It refers to the paper he gave at the annual monetary Policy Conference at Hoover and Stanford last month. It shows that there is still uncertainty, and, in my view based on the Taylor Rule, there is still room to raise the federal funds rate, but of course much less that before the Fed began to adjust.

economicsone.com

Is Monetary Policy Sufficiently Restrictive?

The President of the Federal Reserve Bank of St. Louis, James Bullard, posted a very clear analysis of this question, addressing whether the Federal Reserve had raised the federal funds interest ra…
economicsone.com economicsone.com
 
gbg3 said:
That's the case throughout the country. Everywhere, sellers are having to drop prices - like you said, even multiple times.
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I'm too caught up in my house to follow the national markets..is that so...hmm
 
Callen said:
I know that Trumpers are eager to spin this but if one puts politics aside and listen to the economists , this is not a good report other than the headline number. If it was a good report the markets would be reacting positively but it's basically flat.

The Q2 numbers were skewed by a significant drop in imports caused by the significant increase in them Q1. most economists are saying the real numbers are a blend of Q! and Q2. However, looking past the top number economists are concerned becasue bot consumer spending and Core GDP are weak. Good news is if this trend continues Powell will lower rates next go around.


"Consumer spending, which powers about 70% of the US economy, picked up sharply in the second quarter to a 1.4% rate, up from the anemic 0.5% in the first quarter. But, combined with the previous data, it marks the two slowest quarters of spending since the pandemic. Meanwhile, businesses slowed their spending sharply during the same period, to 1.9% from 10.3%, mostly reflecting a recalibration from the front-running earlier in the year.

Still, the economy isn’t out of the woods and things could take a turn for the worse: A key gauge of underlying demand in the economy — real final sales to private domestic purchasers, also referred to as “core GDP” — slowed in the second quarter to an annualized rate of 1.2%, the weakest pace since the fourth quarter of 2022, down from 1.9% earlier in the year.


“Headline numbers are hiding the economy’s true performance, which is slowing as tariffs take a bite out of activity,” Kathy Bostjancic, chief economist at Nationwide, said in commentary issued Wednesday. “If core GDP performance continues at this pace, we expect there will be even more pressure on the Fed to lower rates as the economy slows.”
Click to expand...
However, looking past the top number economists are concerned becasue bot consumer spending and Core GDP are weak. Good news is if this trend continues Powell will lower rates next go around.

"Consumer spending, which powers about 70% of the US economy, picked up sharply in the second quarter to a 1.4% rate, up from the anemic 0.5% in the first quarter. But, combined with the previous data, it marks the two slowest quarters of spending since the pandemic.
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Did you happen to catch his remarks? "could be this, could be that" I mean it was wishy-washy punting,,again.. A Pathetic performance

They were 2 dissents as well -that hasn't happened since 1993.

If you add this all up with the slowdowns you mentioned -and Powell's inability to identify inflation - it more then calls for at least a 1/4% cut.
 
THis news about the economy actually makes Trumps tax cuts to the rich even more indefensible.

Without boring everybody too much, most economists who view the economy as cyclical in nature in recent history have either come from the Keynesian school of thought, of the Chicago school of thought. The Keynesian school argues that markets are inherently unstable and that government intervention (such as tax cuts or increased spending) is necessary during times of economic crisis, and also during economic recoveries to stop inflation (.

Tax cuts have been argued, often by republicans as a way to stimulate the economy during recessions. Theoretically, tax cuts would result in increasing aggregate demand which is the sum of spending by consumers, corporations, and the government Theoretically, it is a fall in aggregate demand that needs to be avoided during economic recessions -- in fact thats what defines an economic recession.

Its important to note, however, that even Keynesian theorists speculate that government intervention must be timed appropriately and match economic conditions. Thus tax cuts should be timed to stimulate the economy at or near the bottom of an economic downturn or recession. Lowering interest rates and increasing lending are other govenrment interventions that can be taken, although they are usually reserved for the second stage of economic recovery.

The tax cuts seem to have jumped the gun, evev from a Keynesian perspective because no recession really has occurred yet. Way too early in the cycle. Now the Fed is screwed, cause the timing of part 2 of Keynesian intervention (following part 1 interventions like tax cuts or increased direct government spending), which calls for lowering interest rates issuing more treasury bonds, is going to actually cause quite a bit of inflation right at time when the economy will be due for a downturn.

Yet another example of why I cant BELIEVE that Wharton gave Trump a degree -- he really does not seem to understand economic theory. . Its like If Harvard School of Medicine had given Trump a medical degree and he still went off and made that suggestion about swallowing bleach. Or perhaps he just doenst care, these tax cuts are for the benefits of his rich friends, and not part of a Keynesian economic recovery plan
 
Mycroft said:
Why does your graph stop at May?

It would be nice if you provided a link to your graphic.
Click to expand...
fredgraph.png


The link is at the bottom right.
anatta said:
Did you happen to catch his remarks? "could be this, could be that" I mean it was wishy-washy punting,,again.. A Pathetic performance
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You obviously did not. Everyone outside of MAGAland commented that this was one of the best Fed pressers in a very long time.
anatta said:
They were 2 dissents as well -that hasn't happened since 1993.
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Did you catch Powell's response when asked about dissent by reporters? I thought not.
anatta said:
If you add this all up with the slowdowns you mentioned -and Powell's inability to identify inflation - it more then calls for at least a 1/4% cut.
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You're repeating what you're being told to think. Zero critical thinking.

Powell is in a tough spot. On one hand, the labor market continues to grow and unemployment remains stable. However, Trump has created unprecedented uncertainty by announcing broad tariffs and then chickening out. Consumption is stalling....
 
Kushinator said:
fredgraph.png


The link is at the bottom right.

You obviously did not. Everyone outside of MAGAland commented that this was one of the best Fed pressers in a very long time.

Did you catch Powell's response when asked about dissent by reporters? I thought not.

You're repeating what you're being told to think. Zero critical thinking.

Powell is in a tough spot. On one hand, the labor market continues to grow and unemployment remains stable. However, Trump has created unprecedented uncertainty by announcing broad tariffs and then chickening out. Consumption is stalling....
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@anatta "You obviously did not. Everyone outside of MAGAland commented that this was one of the best Fed pressers in a very long time.""
~~~

I haven't seen enough Fed pressers to judge that aspect, but for a presser it was discombobulated pointless rambling. I had to struggle to pay attention to this dweeb "Hey we have no idea what will happen with TARIFFS (his boogeyman). So we'll just stay at a rate hurts interest rate sector consumerism *PUNT*
 
anatta said:
I haven't seen enough Fed pressers to judge that aspect, but for a presser it was discombobulated pointless rambling.
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In no way would a serious observer come to such a conclusion. This is partisan nonsense. Your opinion of him is based on what you are told to think. No objective bone in your body when it comes to political economy.
 
anatta said:
@anatta "You obviously did not. Everyone outside of MAGAland commented that this was one of the best Fed pressers in a very long time.""
~~~

I haven't seen enough Fed pressers to judge that aspect, but for a presser it was discombobulated pointless rambling. I had to struggle to pay attention to this dweeb "Hey we have no idea what will happen with TARIFFS (his boogeyman). So we'll just stay at a rate hurts interest rate sector consumerism *PUNT*
Click to expand...
tariffs are a big uncertainty, its not just the fed who can't plan on what our economic man child moron in chief will do tomorrow, businesses are in the same boat, which is why things like hiring have slowed greatly lately. its a "bogeyman" for a lot of people, for anyone who has to make economic decisions for the future, which is..most of us.

uncertainty is bad. trump thrives on chaos and uncertainty. maybe blame the source of the problem.
 
dseag2 said:
If strong financials were expected going forward my financial advisor would have called me to suggest I convert many of my risk-free investments back into equities. I'm happy to hear some decent news but I'm not jumping up and down yet.
Click to expand...


Perhaps you should get a new financial advisor.


How much are you netting on those 4 - 5% risk-free investments after paying your advisor 1.25%?
 
Kushinator said:
In no way would a serious observer come to such a conclusion. This is partisan nonsense. Your opinion of him is based on what you are told to think. No objective bone in your body when it comes to political economy.
Click to expand...


You're one to speak when it comes to non partisan objectivity. Nothing more than a true blue partisan hack masquerading as an independent.

Not much use for anyone who pretends they're something other then what's painfully obvious. Either no courage to tell the truth or a complete lack of self awareness.
 
Yep the 2nd Q numbers are bunk. Almost all driven by a crash on imports, which went down by 30%, the largest drop since COVID era. That crash added 4.99% to the GDP. 3% - 4.99% and you've got -1.99% GDP.



The rest of the thread is here:

threadreaderapp.com

Thread by @_Investinq on Thread Reader App

@_Investinq: 🚨 U.S. GDP rose 3.0% last quarter but don’t be fooled. The headline hides a fragile economy propped up by tariffs and a sharp drop in imports. Here’s why the numbers don’t tell the full...…
threadreaderapp.com threadreaderapp.com

 
Mycroft said:
With all the opposition facing Trump during his first term, he wasn't able to implement his entire process. That is changed this time around.
Click to expand...

This doesnt really counter anything I said. I pointed out tariffs cause increase prices and job losses and you think "more tariffs" will somehow not have the same effect?

We can already see manufacturing losing jobs.

1000014700.webp

Mycroft said:
btw, the CPI did NOT increase substantially during that time.
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In Trumpts first term America was still riding the post-Great recession recovery which is why the tariffs (along with their smaller scale and more exceptions) didnt produce significant effects in the larger economy and these job losses were mostly absorbed.

This isnt really the case today.
 
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