Q2 GDP up 3.0%… Following a 0.5% decline for the first quarter. The second quarter is on the move.
What does it mean – The key takeaway from this report is the recognition that the stronger growth was fueled by the decrease in imports (-30.3%). These are subtracted in the calculation of GDP. This means net exports component contributed 4.99 percentage points to Q2 GDP growth.
Since first announced on April 2nd, just four short months ago, they have contributed to record revenue and massive investments in the US. Like many Americans, we can’t wait for the jobs to follow driving more consumer spending, growth, and economic freedom.
Nonfarm payrolls growth was much weaker in July than expected…Bureau of Labor Statistics (BLS) revised down May and June by 285,000.
What does it mean – The numbers are weaker than expected. Mostly stemming from uncertainty around the tariff issues. Yet, the unemployment rate was decent at 4.2%, but the U-6 unemployment rate, which accounts for underemployed workers, jumped to 7.9% from 7.7%, the labor force participation rate went down, and people unemployed for 27 weeks or more increased to 24.9% of the unemployed from 23.3% in June. These are both significant numbers.
The key takeaway from the report is really a question. If these numbers are correct why wont the fed lower rates? It is a concern for all watching the discrepancies at the BLS and Fed. It again raises the concern that the Fed and BLS have their own agenda.
Remember, prior to the election in November of 2024, this very same BLS pumped up the job numbers by over 800,000 and the Fed lowered interest rates when things looked great according to the BLS. Now with the shoe on the other foot, both the Fed and BLS are acting completely opposite and may be caught red handed picking sides. One has to ask if this data was available a day earlier, would the Fed have dropped rates?
Total retail sales increased 0.6% month-over-month in June…Excluding autos, retail sales rose 0.5% month-over-month.
What does it mean – Americans felt pretty good about things in June. Sales picked up fairly broad-based across all retail following declines in April and May. The June report also showed increases in discretionary spending activity, such as autos (+1.2%), apparel (+0.9%), building materials and garden equipment supplies (+0.9%), and food services and bars (+0.6%).
First time since 1933…For the first time since 1933, two Fed governors, Christopher Waller and Michelle Bowman, dissented from the decision not to change rates and openly preferred cutting the target for short-term rates instead.
What does it mean – Powell’s term as chairman runs out next year. He has been a political hack for big government and the oligarchy of “big Banks” that the left claims to hate. Yet, the hypocrites like AOC and Bernie jet set on private planes as they go around the country gas lighting Americans about the evil of the very oligarchies their policies have created. All while they and their socialist cohorts shake down private industry for massive donations to their PAC’s and political apparatus.
While Fed members Waller and Bowman are openly and aggressively pushing for rate cuts, it may be of little help. Trump wants reform not just compliance. The Fed has gotten too big and to powerful and now struggles under the weight of its own policies and the bureaucracy it has created and is limiting its ability to do what it was originally designed to do.
Brian Wesbury of First Trust wrote the following this past week due to the news about the fed and in response to the numbers that keep validating cuts by the Fed.
“One reason for all the drama is simple: the president loves drama, and if you get elected president and like drama, then you’re allowed to generate drama. Politics 101.
A second reason is that the president wants to play many candidates against each other so he can get the best deal from the one he picks, the one most likely to be more open to cuts in short-term rates, but who would also maintain the confidence of the markets that inflation would remain contained.
But we believe there may also be a third reason, which is that the president could be looking for a Fed chief who will reverse the disastrous decision originally made by Ben Bernanke (supported by the votes of Warsh and Bullard) almost two decades ago.
That decision was to abandon the system of implementing monetary policy by managing the scarcity of reserves in the banking system, which resulted in market shifts in short-term interest rates, and instead launching quantitative easing, leading to (over-) abundant bank reserves, and then directly controlling short-term rates by paying banks interest on reserves, a system that’s led to the Fed itself running massive operating deficits.
Think about it. For better or for worse, no president in our lifetimes been more willing to use his political capital to review and change the way Washington works. USAID, the Department of Education, the Census Bureau, colleges that rely on federal largesse have never seen such rapid-fire changes. We would not be surprised if the Fed is next.”
I believe Brian Wesbury nails it. Over the last few years, I have written many times about the overt hypocrisy of the Fed and fraud that has been laid upon the American taxpayers as the largest banks have been enriched by both sides of the aisle.
Banks have enjoyed record profits while American taxpayers have shelled out $ hundreds of billions to them only to watch “big Banks” become more powerful, debank conservative organizations, gun manufacturers, and defense companies and a number of individuals who spoke out against COVID and the massive overreach of government, all while the small local and regional banks that actually originate 70% of real estate loans and business loans have seen their numbers shrink due to the undue pressure put on them by politicians claiming to want to stop the “Oligarchy”. “Too Big to Fail” and never-ending fearmongering by weak-kneed politicians and Fed Chairman Bernanke forced the idea of using the banks to reverse the cowardly actions they took that we, the American taxpayer, are now paying the price for. Remember Dodd Frank? Two Leaders who got sweetheart deals and then made news trying to fix what they and DC broke…That sure sounds familiar. Unfortunately, the same creatures of fear and pedigree are still running the biggest handout and charity program in the history of America. You can thank Powell for perpetuating this and growing it to well over $200 billion a year.
The good news is we have a few Congressmen like Chip Roy, Warren Davidson, Andy Biggs and several others along with Senators Ted Cruz and Rick Scott who recognize the massive waste and fraud and are pushing to remove the Fed from paying interest to banks on their reserves. Remember this was passed in the 11th hour by Bush and put on steroids and became an economic power grab by Obama. It was meant as an emergency action to shore up the banks short term. I.E its name “The Emergency Economic Stabilization Act of 2008”. Yet, like everything in DC, if it generates revenue, tax it, if it can be regulated, regulate it, if it works, break it. I think the elected moron forgot why they got elected. Keep government efficient, small and out of out business!! There are 195 recognized countries in the world. Yet, there is only 1 that has a constitution designed to limit government and keep you free to pursue your happiness.
Are we asking the right questions? Brian Wesbury makes it very clear and raises an amazing point. Congress, the Fed, the Senate, none have raised this point or have done anything about it. Through incredible connections and hard work, Brian Wesbury was able to propel this issue of paying interest on bank reserves through Charlie Kirk, Steve Bannon and others. Their programs cast a bright light on the hypocrisy of DC and the massive fraud banks have been getting away with since 2008 due to the help of Bernanke and Powell and the common thread that crosses over party lines…Massive amounts of donations from the banking sector to politicians and their PAC’s.
Brian asks us all to, “think about it. For better or for worse, no president in our lifetimes been more willing to use his political capital to review and change the way Washington works. USAID, the Department of Education, the Census Bureau, colleges that rely on federal largesse have never seen such rapid-fire changes. We would not be surprised if the Fed is next.”
It might be time to think about what the Genius act will do and what it means to us all? How will Stablecoin work and what does it mean for investors in digital currency? Will demand continue to drive the value as more people convert to using the Stablecoin? Is the concept of the Stablecoin creating another fiat currency to create demand for more U.S. debt as it is required to be backed by U.S treasuries or dollar denominated securities? Central Bank Digital Currency. Is this the end game and is the Genius act paving the way and allowing the stable coin concept to simplify the transition to a digital currency becoming the gateway to more government control through your digital wallet? Remember what happened to our neighbors to the North.
Recently Tether froze clients access to their digital currency. This further proves the point that this may be the ultimate gateway drug to Big Government. It has happened several times and continues to be an issue as the process for the government has been made much easier for them to freeze assets, further reducing individual liberties and violating many of our rights. It truly is an attack on democracy by “Big Government”. Below is the link to an article titled “Tether’s $24M Freeze Proves Gov’t-Compliant Stablecoins Are Just CBDCs With Better Marketing” by The Free Thought Project.
Government Freezes Digital Currency
Transactional Gold. Several states have already approved transactions in Gold, and this will eliminate the taxation of gold transactions for payment, not to mention it is Constitutional!!! If done correctly it solves many issues and will strengthen our currency, fight inflation, and provide a choice for all. Truly giving you economic freedom. Due to the constitution it solves many of the issues a digital currency is trying to solve but can’t. Taxes!!! Got to wonder why the Fed and many of the biggest banks and most in government fear transactional gold more so than the ability for the government or a digital bank to shut your account down and cut you off from your finances?
Freedom scares those (elected and unelected) who lose power and control when you are put in charge of your own destiny.
Let’s roll America!!
Doug De Groote, CFP®, MBA, CTC
Managing Director
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