JUST IN: PCE inflation rose 0.3% in June. That takes the annual inflation increase up to 2.6% (highest since February). "Core" PCE inflation (excluding food and energy) ticked up to 2.8% The most interesting data is WHAT people are and aren't buying. Take a look at the chart. People are really staying away from cars and car parts out of fear of tariffs.

We’re 16 hours now from the President’s midnight trade deadline, at which point sweeping tariffs of 11-50% are set to take effect against 50+ countries. These were announced April 2, delayed to July 9 and then Aug. 1. As currently written via EO, all take effect at 12:01am.

Will the Fed cut in September? It's now a coin toss (48% say yes) Yesterday, almost 65% said yes. Powell sounded open to a September cut, but his bar is fairly high for it to happen. He clearly needs to see labor market deterioration. [Data from CME FedWatch]

Summary of Fed Chair Powell: 1) Economy is solid. Fed policy is "modestly restrictive" 2) Consumption is slowing, but not in a worrisome way 3) A September rate cut is possible, but it will depend on data (esp. data showing a weaker labor market) 4) **Unemployment rate is 'the main number you have to look at now'** 5) "nice visit" w/President Trump. Powell dodges any other political Qs #FOMC #Fed #InterestRates

This is the key chart when anyone talks about Q1 or Q2 2025 GDP. Imports surged in Q1 as companies tried to get stuff into the US ahead of tariffs. Then...imports plunged in Q2 as firms cut back To put it another way: Q2 trade added nearly 5 percentage points to GDP Q2 decline in biz investment subtracted -3.1 percentage points from GDP

The US economy saw 3% GDP growth in Q2. But it was highly unusual... 1) A massive decline in imports (-35% for goods) lifted GDP 2) Consumption was +1.4% -- a solid, but not spectacular number. 3) Business investment DECLINED in Q2 This is an economy running just above 1% if you strip out the trade noise. Real final sales to private domestic purchasers was 1.2%

JUST IN: Big rebound in growth -- Q2 GDP comes in at +3% (beating expectations of around 2.5%) The key drivers were: 1) A massive decline in imports after the April "Liberation Day" tariffs. -35.3% (!) for goods in Q2 2) Consumption up 1.4% (vs. just 0.5% in Q1) Notable: Business investment declined in Q2, underscoring how nervous firms are to do much hiring or spending in uncertain times.

Hiring is HIGHLY concentrated right now in just 3 industries. Good luck finding a job if you aren't in one of these sectors. Healthcare, social assistance, and state+local gov't (mainly K-12 education) made up 94% of the jobs added in June. Healthcare, social assistance, and state+local gov't made up 78% of the jobs added in the past 6 months. Healthcare, social assistance and state+local gov't made up 69% of the jobs added in the past year. We need to watch this. Is it AI? Is it tariffs/uncertainty? Is it a "renormalization" after a lot of post-pandemic hiring? Whatever the cause, this is concerning and not a sign of a healthy labor market. #jobs

Hiring is frozen outside of healthcare and K-12 education. The June hiring rate fell back to 3.3% --> one of the lowest levels since 2013. Hiring is low and it's HIGHLY concentrated in basically two industries. Americans are noticing this. "Notably, 18.9% of consumers indicated that jobs were hard to get in July, up from 14.5% in January," according to the Conference Board's July survey.

Hiring is frozen outside of healthcare and K-12 education. The June hiring rate fell back to 3.3% --> one of the lowest levels since 2013. Hiring is low and it's HIGHLY concentrated in basically two industries. Americans are noticing this. "Notably, 18.9% of consumers indicated that jobs were hard to get in July, up from 14.5% in January," according to the Conference Board's July survey.