Posted originally on Jul 31, 2025 by Martin Armstrong
Data from the Commerce Department shows that the US gross domestic product rose 3% in Q2 on a seasonally inflation-adjusted basis. The figure may have surpassed estimates by around 0.7%, but it does not indicate the beginning of a rising trend.
First, the figure has already been adjusted for inflation to fit a narrative. The first quarter saw a sharp uptick in imports as businesses attempted to avoid tariffs. Imports then declined by an astounding 30.3% last quarter, with exports falling by 1.8%. A good portion of the final figure is due to net trade swings that distorted the reading. Demand did not necessarily fall in Q2, but was offset by the surge experienced during the uncertainty at the beginning of the year.
GDP rises when imports drop due to the Keynesian formula: GDP=C+I+G+(X-M).
C = Consumer Spending
I = Investment (business capital spending, housing, inventories)
G = Government Spending
X = Exports
M = Imports
Imports (M) are subtracted from this calculation as GDP measures the DOMESTIC production. A rise in imports is considered an indicator that more goods were produced abroad, therefore, they subtract them from GDP. When imports decline, (X-M) rises and leaves the impression that fewer foreign goods/services were consumed in the US. Imports declining should not be considered growth, but the US refuses to move away from Keynesian model thinking.
Consumer spending, two-thirds of total GDP, rose by 1.4%, but this was offset by a decline in business spending. Final sales to private domestic purchases rose 1.2% in Q2 compared to 1.9% in Q1, indicating weakening demand. Unemployment declined to 4.1% in June after the economy added around 150,000 new positions this year.
This is neither a reason to celebrate nor a reason for concern. Every headline is praising the 3% uptick as a major win without realizing that not much has changed—the American economy is still experiencing stagflation.
Posted originally on CTH on July 30, 2025 | Sundance
President Trump recaps the latest strong economic numbers and launches the CMS Digital Health Tech Ecosystem during an event at the White House today. WATCH:
Posted originally on CTH on July 30, 2025 | Sundance
Too funny. The economic pretending is so strong almost every outlet leads the Gross Domestic Product news release by saying “better than expected.” Duh! The Bureau of Economic Analysis (BEA) releases the GDP date for the second quarter (Q2) and shows a 3.0% jump in economic growth.
We say “duh”, because it was an entirely predictable result. Why, because imports are a deduction to the GDP equation and imports dropped 30.3% in the second quarter (Table 1, line 19). We said this was going to happen because there was a surge of imported goods in the first quarter as companies tried to be proactive with orders in advance of tariffs.
That massive influx of imports made the Q1 GDP weak (-0.5%). Conversely, with all those goods delivered in the first quarter, the products were not imported in Q2 and the GDP rebounded. The lack of imports, ultimately the lack of deduction, resulted in a 5.18% positive change to the second quarter GDP (Table 2, line 47).
But wait, the winning doesn’t stop there. Remember, the Big Beautiful Bill just passed in July. That means fixed asset investment is likely to expand in Q3 because 100% expensing on capital investment was part of the BBB.
But wait, there’s more. Annual wages spiked 4.4% — double the rate of inflation (2.1%). That means people are growing their wage incomes twice as fast as prices are rising. Real wage growth is back again! Yes, REAL WAGE GROWTH.
WASHINGTON – Recession? What recession? The US economy bucked nonstop doom-and-gloom by economists — including some at Wall Street’s biggest banks — and reported stronger-than-expected growth in the second quarter, marked by a surge in hiring and wages.
Gross domestic product – the value of all goods and services produced across the US economy – jumped by a seasonally and inflation adjusted 3% in the second quarter, the Commerce Department said Wednesday.
That rebounded from a 0.5% decline in the first quarter and beat estimates of just 2.3% growth. A recession is usually defined by the GDP slipping in two consecutive quarters.
Meanwhile, private employers added 104,000 jobs last month, according to the ADP National Employment Report released Wednesday. That reversed a 23,000 drop in June and exceeded the forecast for an increase of 64,000.
Annual wages spiked 4.4% — well above the rate of inflation, which has remained below 3% despite harping that President Trump’s tariffs would jack up prices.
“Our hiring and pay data are broadly indicative of a healthy economy,” Nela Richardson, ADP’s chief economist, said.
“Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient.” (more)
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