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)
Posted originally on Jul 29, 2025 by Martin Armstrong
As expected, Russia essentially told Trump to shove it. I believe that Trump gave his 10-12 day ultimatum as part of pressure from the EY, which is desperate for war. All I can say is that Trump is playing a perilous game, and he is on the wrong side. If Trump were serious about PEACE, then he should demand that Europe simply honor the Minsk Agreement, and the killing would stop within the hour.
The Kremlin spokesman Dmitry Peskov was gracious. He respectfully said that Moscow has “taken into account President Trump’s statement yesterday.”Effectively, Peskov made it clear that Russia will continue to engage in fighting in Ukraine. Peskov added that Moscow remains “committed to the peace process to resolve the conflict around Ukraine and to ensure our interests in the course of this settlement,” according to TASS.
Let’s be honest here. Is Trump blind? Putin agreed to two peace deals. The first time, Merkel admitted the West lied and had no intention of honoring it. Then another was about to be signed, and Boris Johnson rushed to Kiev to instruct Zelensky that he was not allowed to sign any peace deal. Excuse me, but if I were Putin, there is no way you are going to fool me a third time.
While Peskov said that Russia was still interested in rebuilding ties with the United States, the issue is not currently on the table. In a post on X, former Russian President Dmitry Medvedev, the deputy chairman of the Security Council of the Russian Federation, said Trump was playing “a game of ultimatums” that could lead to a war involving the United States. This is what I have been warning about. Everyone knows this is NOT a war between Russia and Ukraine. This is a war between Russia and NATO.
Medvedev pointed out that “Each new ultimatum is a threat and a step towards war. Not between Russia and Ukraine, but with [Trump’s] own country.” It was Trump who indicated that he was not interested in more talks with Putin. He said sanctions and tariffs would be used as penalties for Moscow if it did not meet Trump’s demands. Sanctions and tariffs will only further ensure an economic depression for the EU into 2028. Trump has gone off the rails, threatening sanctions on both Russia and buyers of its exports unless progress is made.
This will not be simply a trade war. This is the same tactic that FDR used on Japan that led to WWII. So Trump is going to put sanctions on India and China for buying Russian oil? I do not know who is advising Trump, but even threatening this type of action has already resulted in the formation of BRICS. Putting sanctions on India will be a huge mistake. As of mid-2024, India holds about $240 billion in U.S. debt, making it one of the top 15 foreign holders of U.S. Treasury securities. For comparison, China holds around $770 billion. At the same time, India has been adjusting its holdings of U.S. debt, though the available data does not explicitly state large-scale sales. India is promoting rupee-denominated borrowing (e.g., Masala Bonds) and deepening its sustainable debt market (now worth $55.9 billion) to reduce reliance on foreign currency debt. It appears that India is in a position to start dumping US debt if Trump dares to impose sanctions, and this will result in a declining dollar against the rupee from 2025.
I remain concerned that this can backfire and we see Putin replaced by Medvedev, who understands this is a NATO threat to conquer and break up Russia, destroying their country and Kallas of the EU has openly declared.
Posted originally on CTH on July 29, 2025 | Sundance
This is one of those interviews that simply must be watched in its entirety. It’s long, almost 3 hours, but take the quiet time to watch and absorb the information provided by economist Professor Richard Werner.
Werner discusses something absolutely vital to understand about the nature of economics and the banking system that underpins it. You have often heard me say “there are trillions at stake” when describing the elements aligned against President Trump. Well, Werner gives context to what lies behind those trillions.
Nine years ago, as President Elect Trump won his first election, I wrote about the future of economics and the potential if a Main Street monetary and banking system was created. {GO DEEP} Richard Werner discusses the specific issue of how credit creation by regular banks actually creates money. He’s the first person I have seen speak who really gets it.
There are distinct differences between banks creating money for asset purchases (inflation), consumer purchases (inflation) and GDP growth (Main Street expansion). He simply nails it, and that is why he was put on the CIA radar.
When Werner speaks of the need for two distinct banking systems as a solution to the “inflationary” impact of money created for asset purchases vs GDP growth, he is specifically highlighting the difference between Wall Street money and Main Street money. This, in the largest measure, is exactly why President Trump and Secretary Mnuchin created the dual banking system. This is what led to the global pandemic as a tool to stop President Trump.
I cannot recommend this interview enough. However, don’t sell yourself short. Find a quiet place, quiet time, and take notes as you listen to Richard Werner outline the true and unspoken nature of how money is created.
When you understand what Werner is saying, everything the FED and Central Banks do starts to make sense. WATCH:
Behind what Werner is explaining you will find the motives to oppose President Trump. Werner doesn’t draw the connection to Trump’s policies, but when you hear him outline the history and the problem you will get it.
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