U.S. Economy “Refused to Quit”, Only to Be Propped Up By Consumer Debt and Tariff Hat Tricks…

“I won’t quit you…” 

The U.S. economy refuses to slow down… not because it’s healthy, but because we just don’t have that “quit” in us. Case in point: GDP for the second quarter was revised up to 3.3%, beating both the initial 3.0% read and Wall Street’s 3.1% forecast. How? Well, the driver wasn’t innovation or productivity… Instead, it was the heroes (read: American consumers) still swiping plastic like interest rates are imaginary and tariffs are someone else’s problem.

(Source: Giphy) 

In short, consumer spending came in at 1.6%, a notch higher than the 1.4% originally reported. Final sales to private domestic purchasers… a.k.a., the metric the Fed treats like holy scripture… jumped to 1.9% from 1.2%. Translation: beneath the headline noise, Americans are still burning paychecks and running tabs in a way that keeps the machine humming.

(Source: CNBC)

But the big swingin’ factor wasn’t Main Street confidence, it was Trump’s tariff gamesmanship. Imports collapsed nearly 30% as businesses stockpiled before his April 2 “liberation day” announcement. Exports dropped too, but not as badly. And net exports ended up adding almost five full points to GDP. Bigly. Spoiler: you can thank Customs paperwork for juicing the headline number. 

As for inflation? Core PCE held at 2.5%, headline PCE eased to 2.0%... basically the Fed’s wet dream scenario on paper. Except Powell and crew know they’re watching a house of cards propped up by debt, tariffs, and consumers who keep buying iPhones they can’t afford while screaming about grocery prices. With that said, for the first half of the year, GDP averaged just over 1% per quarter thanks to that ugly Q1 contraction. The Atlanta Fed’s GDPNow has Q3 running at 2.2% so far. Not terrible, but not exactly the kind of momentum that makes Powell slash rates without sweating.

(Source: Giphy) 

So given all of this, what do we actually have here? Simple: We have an economy that refuses to die, but only because American’s are putting the team on their back with maxed out credit cards to buy the illusion of normalcy. In reality though, tariffs are distorting the math, inflation hasn’t gone away, and consumer debt is piling up like empty beer cans at College Gameday's tailgate. 

But regardless, don’t let the monster beneath the 3.3% headline scare you. According to the paper, we are back… and Uncle Sam is cashin’ checks and snappin’ necks with it. Until next time, friends…

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.