Folks, I almost spilled my coffee reading this one. The world’s largest economy, ours, of course, is apparently “losing steam” heading into summer. Yeah, because a 1.5% annualized growth rate in GDP is practically a recession. I mean, who needs that kind of growth, right? The article says it’s all because of a “red-hot demand for AI infrastructure” that’s widening the trade deficit and dampening growth. You can’t make this stuff up.
I’m reading this on CNN, and I have to say, it’s a real thrill ride. The GDP expanded at an annualized rate of 1.5% from April through June, which is well below the 2.1% rate in the prior quarter. Oh no, the sky is falling! Economists predicted 2.1%, but I’m sure they’re just a bunch of geniuses who know what they’re talking about. The trade deficit swelled 42.2% to a seasonally adjusted $77.6 billion in May, which is the highest level in nearly a year. I guess that’s what happens when we import a lot of computer accessories and semiconductors.
But wait, it’s not all doom and gloom. Consumer spending, the lifeblood of the US economy, picked up sharply in the second quarter to an annualized 3.2% rate. That’s the fastest pace in nearly a year, and it was the largest contributor to GDP for the three-month period. Bless their hearts, Americans are still spending money like there’s no tomorrow. Business investment was also robust, expanding at an annualized rate of 8.4%, down slightly from the prior quarter’s 10.6%. I guess that’s what happens when businesses are investing heavily in AI.
Kathy Bostjancic, chief economist at Nationwide, said that Americans benefited from a robust labor market, a buoyant stock market, bigger tax refunds, and savings. She also said that the renewed rise in energy prices presents a headwind for household budgets, but if the labor market stays strong and income gains solid, consumers can continue to ride out the energy shock and maintain solid spending. Sounds like a plan to me. A closely-watched measure of underlying strength in the economy, real final sales to private domestic purchasers, accelerated sharply in the second quarter, up to 3.9% from the prior quarter’s 1.7%. I’m no economist, but that sounds like good news.
The article goes on to say that businesses investing heavily in AI and consumers flush with bigger tax refunds boosted growth at the start of the year. The World Cup also drew tourists from around the world, and businesses continued to invest in AI. In-person spending rose 5% on a yearly basis across the cities that hosted a game, which included 11 of the largest American cities. Restaurants and bars saw some of the largest gains, because, priorities. But it wasn’t all sunshine and rainbows, the Iran war jacked up inflation, and consumer sentiment was affected. Somewhere in Atlanta, a producer thought this sounded terrifying, and now we have a “crisis” on our hands.
In conclusion, the US economy is still chugging along, despite what the pundits say. Consumer spending is up, business investment is robust, and the labor market is strong. Yeah, there are some challenges, like inflation and the trade deficit, but we’ve been through tougher times before. So, let’s all take a deep breath and remember that the sky is not falling, at least not yet. And if it does, we can always just blame it on AI, because that’s what everyone else is doing. 😊
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
