Hey everyone. The Jackal is in its normal August recess, but I still had some thoughts about the economic data piling in this week. This will be quick and painful.
Hit me with your disclaimer.
I’ve said this before, but Elisabeth’s job is greatly helped by a robust economy. So, I have a natural bias1 in favor of pretending things are great. That said, it pains me to tell you: Things are not great.
On Wednesday, we got the GDP report, and while the top line number was good (3% growth), it registered that high mostly because imports plummeted. Ben Casselman has a good explanation of this:
Gross domestic product, adjusted for inflation, increased at a 3 percent annual rate in the second quarter, the Commerce Department said on Wednesday. That topped forecasters’ expectations and appeared to represent a strong rebound from the first three months of the year, when output contracted at a 0.5 percent rate.
But both those figures were skewed — in opposite directions — by big swings in trade and inventories caused by President Trump’s ever-shifting tariff policies. Taken as a whole, the data from the first six months of the year tell a more consistent story of anemic, though positive, economic growth.
That last line is kind of the worst part. Are we growing? Yeah. But Trump’s economic policies have undoubtedly slowed us down:
Maybe you are thinking what I was thinking after the election in 2024: Trump’s policies will slow down the economy, but that will eventually lead to the Federal Reserve cutting rates and thus lowering the costs of borrowing.
Well, think again. On Wednesday, the Chairman of the Federal Reserve, Jerome Powell, confirmed that Trump’s tariffs are driving up inflation, thus making the Fed more hesitant to cut:
Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.5 percent over the 12 months ending in June and that, excluding the volatile food and energy categories, core PCE prices rose 2.7 percent. These readings are little changed from the beginning of the year, although the underlying composition of price changes has shifted: services inflation has continued to ease, while increased tariffs are pushing up prices in some categories of goods. Near-term measures of inflation expectations have moved up, on balance, over the course of this year on news about tariffs, as reflected in both market-based and survey-based measures.
So, if you were waiting for rates to go down so you could refinance your mortgage, get your first one, or do a home project, you will be waiting a lot longer. Stagflation might not be here yet, but it’s peaking its head around the corner.
I cannot overstate this: If America had selected Kamala in 2024, the economy would be in much better shape. Inflation would be easing even further, job growth would be higher, and consumer spending would be elevated. Instead, Donald Trump is showing the world that incompetent leadership matters, even in the world’s largest and most diversified economy.
Well, it has to get better from here.
I actually think the Fed is underestimating how bad things really could get.2 They are looking at all the numbers and concluding that - despite tariffs and general economic stupidity - the fundamentals of the U.S. economy are still strong. But under the hood, things are looking grim: There are more U.S. job sectors currently experiencing job losses as opposed to job gains, a harbinger of a recession. And Trump’s tariffs haven’t even completely worked their way through the system yet.
This was all reflected in the jobs report today, which showed a growth of only 73K jobs in July, and unemployment a tic higher at 4.2%. But it was the revisions that really caught the eye: Two previous reports from May and June were both revised downward by 258K jobs, a startling number. If you want context for how startling:
The picture is pretty clear now: Since Trump took office, the economy has gotten markedly worse as a result of his policies, from tariffs to (under discussed, in my opinion) mass deportations. And things are likely to get worse. A lot worse.
It is hard to keep track of everything, but Trump delayed his “liberation day” tariffs until August 1st, which is today. He gave a host of countries the opportunity to make “deals” to avert tariffs, but what most countries are seeing is that Trump ACTUALLY JUST LIKES TARIFFS. Trump heralded a huge “deal” he made with the European Union, that would “reduce” their tariff rate to 15%. In return, the EU would “invest” about 600 billion dollars in the United States over the next decade.
Leave aside the fact that there really was no actual deal (the EU pretty much said they would not be investing the money): Trump still went through with his tariffs on European products, which means Americans will be paying more for everything from the old world. Predictably, markets tanked after Trump announced the deal.
Trump had originally promised “90 deals in 90 days,” but his Administration achieved less than 10% of that and now it really looks like Trump isn’t going to back down. Moreover, no country is motivated to make a deal with Trump because all the “deals” still result in the highest tariffs rates in almost a century.
The upside to the EU deal is that they didn’t retaliate against us, which is maybe what we can hope for from other countries going forward. My guess is that the EU is simply going to wait until 2029, when the US has a Democratic president, or a Republican one that doesn’t have dementia.
But I think that’s wrong: Even if Trump doesn’t try to run himself, he is going to push one of his kids to run in his place, and they are going to continue the tariff policy, because even though Trump’s IQ is in the single digits, his kids’ are even lower (maybe with the exception of Ivanka).
Even if you don’t believe that, take a look at Trump’s approval rating on tariffs and inflation:
For the record, that -44 points is a worse number than Joe Biden ever hit during his presidency. Just wild.
It is just a crazy thing to write six months into Trump’s presidency. Earlier this year, you could see the writing on the wall; it was clear even to a doofus like me. And, remember all those economists from last year who said Trump’s economic policies would be terrible? Trump is slowly proving them right.
Yeah, yeah. Talk about Epstein.
The Epstein story obviously isn’t going away, even if more and more evidence emerges that Trump is named in the “files.” But we’ve been at sort of a standstill for a week. The big change has been Ghislaine Maxwell’s apparent desire to talk about Epstein.
She did an interview with Trump’s personal lawyer, Todd Blanche, and was granted immunity for the conversation. First, I will only say that is sick. Maxwell herself participated in Epstein’s crimes and the Trump Administration has already given her some form of protection. She is a true monster, undeserving of any favorable treatment outside of already provided justice.
Second, I think the plan is pretty clear here: The Trump Administration wants Maxwell to testify/say3 that Trump had nothing to do with Epstein, and in exchange for that, Trump will pardon her.
Like the tariffs issue, you can sort of see it playing out in slow motion. But it is pretty clear that’s the plan.
Should-reads:
I haven’t done any of these in a while because I feel like each Jackal is super long, but I enjoyed these three New Yorker pieces:
A profile of Howard Lutnick, Trump’s Commerce Secretary.
This terrifying piece by Dexter Filkins.
This poignant profile of a physician from Long Island.
In addition, David French had a great discussion with Tim Miller on the starvation currently happening in Gaza, with Israel’s approval.
I’m on vacay, and will be in Telluride for a few days. I will probably just do a Jackal with lots of pictures from there, because it is truly one of the most beautiful cities in the country.
The more conversations I have with people about media “bias,” the more I think no one understands what “bias” actually means. Generally, having a “bias” in journalism is having an understanding of how your priors might affect your current judgment.
For example: I am a white, male, Evangelical Christian from New York. My “bias” is me hearing things related to any of those priors (being white, a dude, Evangelical, and a New Yorker), and concluding they are normal.
A few weeks ago, lots of people were puzzled by a group of Christians speaking in tongues on White House grounds. To me, that is pretty normal! But I could see how that would seem strange to people who did not grow up Evangelical.
Worth noting that in Wednesday’s meeting, two Fed board members disagreed with the consensus and wanted to cut. Normally it is unanimous.
It doesn’t matter if she says it under oath or otherwise, because Maxwell routinely lies under oath. It was a huge factor in her sentencing.