1st 6 months of 25 gdp 1.25%. Going to get total 25 gdp to about 2 to 2.5%. So, slow growth and persistent elevated inflation. Its still biden economy for the most part. We really need to get to a Trump 3rd term.

BusterAg said:

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Logos Stick said:

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BusterAg said:

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Logos Stick said:

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Another poster made a good point in a different thread. Imports are down big time because of stocking up previously. That was the major factor in this number. 3% is good, but consider the context here.

eta: that poster just beat me to it above

---

Imports going down doesn't increase GDP. That logically doesn't make sense. Subtracting net imports is just a way to do the GDP increase calculation indirectly.

Domestic production that replaced net imports increases GDP.

---

Wrong!

I guess you don't know the formula. Let me help you!

GDP=C+I+G+(X-M)

M=imports

If everything stays the same in that formula and imports go down, what happens to GDP?!

see chart above my post!

---

That is the expenditure approach.

The price of net imports are included in C+I+G even though they were not produced locally. GDP doesn't go down up when you import less, it is just that C+G+I are understated by X-M.

If you were actually measuring output directly instead of backing into output using consumption, imports have zero impact on production.

Just think about it at the margin. When you import one widget, domestic output does not go up or down with that one widget. You haven't made anything else. It's just that this widget's price is included in the price of all consumed goods in the nation, whether imported or not, and then back out you back out all imports (including your widget) and add all exports. GDP was $100 before you bought the widget for a $. Now C+I+G in your formula is overstated by $1, because it is included in G. So you have to back it out with X-M.

The key here is that the reason why GDP is growing is not directly related to lower imports. Domestic production is increasing, replacing exports. That is what is cool.

---

Good grief! The primary reason GDP is at 3% this month is because imports went down, which you claimed was impossible. They went down because of loading up in Q1. The chart above my original post is not hard to comprehend for most people! You are incorrect and all the nonsense you typed above doesn't change that.

Kozmozag said:

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1st 6 months of 25 gdp 1.25%. Going to get total 25 gdp to about 2 to 2.5%. So, slow growth and persistent elevated inflation. Its still biden economy for the most part. We really need to get to a Trump 3rd term.

---

I'd rather just raise Reagan from the dead using witchcraft, and let him run the US. Just as likely as any talk about a Trump 3rd term.

Zombie Reagan would be the bomb.

Quote:

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Cut or two won't help the housing market. It's the home prices that are causing the problem. A little lower interest rate will not move the needle. Home prices coming down is the only thing that will fix that other than a cut so large it would tank the economy.

---

says someone not in the market.

I close on a home tomorrow - had to buy down the rate.

Two Fed members dissenting shows there is growing divide within the Fed.

However, interest rate futures continue to price in 1 to 2 rate cuts in 2025.

All eyes will be on the Fed press conference.

Follow us @KobeissiLetter for real time analysis as this develops.

— The Kobeissi Letter (@KobeissiLetter) July 30, 2025

Should have been a cut in rates today but Powell and friends holding firm. They still believe in tariff inflation coming I guess.

But even though Trump will rail on Powell about this, this is a huge win for Trump long term.

More dry powder heading closer to the midterms is not a bad thing. Powell may be more than willing to play the "bad cop" against Trump for a variety of reasons, but one may be in order to help Trump.

Pure speculation on my part, though it was particularly informed regarding a convo about how Powell thinks.

Logos Stick said:

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BusterAg said:

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Logos Stick said:

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BusterAg said:

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Logos Stick said:

---

Another poster made a good point in a different thread. Imports are down big time because of stocking up previously. That was the major factor in this number. 3% is good, but consider the context here.

eta: that poster just beat me to it above

---

Imports going down doesn't increase GDP. That logically doesn't make sense. Subtracting net imports is just a way to do the GDP increase calculation indirectly.

Domestic production that replaced net imports increases GDP.

---

Wrong!

I guess you don't know the formula. Let me help you!

GDP=C+I+G+(X-M)

M=imports

If everything stays the same in that formula and imports go down, what happens to GDP?!

see chart above my post!

---

That is the expenditure approach.

The price of net imports are included in C+I+G even though they were not produced locally. GDP doesn't go down up when you import less, it is just that C+G+I are understated by X-M.

If you were actually measuring output directly instead of backing into output using consumption, imports have zero impact on production.

Just think about it at the margin. When you import one widget, domestic output does not go up or down with that one widget. You haven't made anything else. It's just that this widget's price is included in the price of all consumed goods in the nation, whether imported or not, and then back out you back out all imports (including your widget) and add all exports. GDP was $100 before you bought the widget for a $. Now C+I+G in your formula is overstated by $1, because it is included in G. So you have to back it out with X-M.

The key here is that the reason why GDP is growing is not directly related to lower imports. Domestic production is increasing, replacing exports. That is what is cool.

---

Good grief! The primary reason GDP is at 3% this month is because imports went down, which you claimed was impossible. The chart above my original post is not hard to read for most people! You are incorrect and all the nonsense you typed above doesn't change that.

---

There is a difference between a mathematical relationship between two numbers and real-world causation.

It's wrong to say that the reduction in imports was the cause of GDP growth. It is interesting that GDP growth and the reduction of imports happened at the same time, though.

Imports only affect the calculation as you presented it because you are measuring expenditures to estimate production, and expenditures and production are not the same.

BusterAg said:

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Logos Stick said:

---

BusterAg said:

---

Logos Stick said:

---

BusterAg said:

---

Logos Stick said:

---

Another poster made a good point in a different thread. Imports are down big time because of stocking up previously. That was the major factor in this number. 3% is good, but consider the context here.

eta: that poster just beat me to it above

---

Imports going down doesn't increase GDP. That logically doesn't make sense. Subtracting net imports is just a way to do the GDP increase calculation indirectly.

Domestic production that replaced net imports increases GDP.

---

Wrong!

I guess you don't know the formula. Let me help you!

GDP=C+I+G+(X-M)

M=imports

If everything stays the same in that formula and imports go down, what happens to GDP?!

see chart above my post!

---

That is the expenditure approach.

The price of net imports are included in C+I+G even though they were not produced locally. GDP doesn't go down up when you import less, it is just that C+G+I are understated by X-M.

If you were actually measuring output directly instead of backing into output using consumption, imports have zero impact on production.

Just think about it at the margin. When you import one widget, domestic output does not go up or down with that one widget. You haven't made anything else. It's just that this widget's price is included in the price of all consumed goods in the nation, whether imported or not, and then back out you back out all imports (including your widget) and add all exports. GDP was $100 before you bought the widget for a $. Now C+I+G in your formula is overstated by $1, because it is included in G. So you have to back it out with X-M.

The key here is that the reason why GDP is growing is not directly related to lower imports. Domestic production is increasing, replacing exports. That is what is cool.

---

Good grief! The primary reason GDP is at 3% this month is because imports went down, which you claimed was impossible. The chart above my original post is not hard to read for most people! You are incorrect and all the nonsense you typed above doesn't change that.

---

There is a difference between a mathematical relationship between two numbers and real-world causation.

It's wrong to say that the reduction in imports was the cause of GDP growth. It is interesting that GDP growth and the reduction of imports happened at the same time, though.

Imports only affect the calculation as you presented it because you are measuring expenditures to estimate production, and expenditures and production are not the same.

---

You do not understand this at all. We include X - M because imports are what we do not produce! But X is what we do produce and do NOT sell in the US; it's not counted in the C. It has to be added back in. Thus, we have X - M to reflect domestic only production in GDP! If we did not do that, then GDP would be incorrect because C would not include X and the imports would be potentially counted as consumer spending, even though we did not produce it!

The real world cause - because it actually happened in the real world - was a drop in imports! If you take out exports and imports, GDP would be - 1.99%. That is a contraction!

Logos Stick said:

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BusterAg said:

---

Logos Stick said:

---

BusterAg said:

---

Logos Stick said:

---

BusterAg said:

---

Logos Stick said:

---

Another poster made a good point in a different thread. Imports are down big time because of stocking up previously. That was the major factor in this number. 3% is good, but consider the context here.

eta: that poster just beat me to it above

---

Imports going down doesn't increase GDP. That logically doesn't make sense. Subtracting net imports is just a way to do the GDP increase calculation indirectly.

Domestic production that replaced net imports increases GDP.

---

Wrong!

I guess you don't know the formula. Let me help you!

GDP=C+I+G+(X-M)

M=imports

If everything stays the same in that formula and imports go down, what happens to GDP?!

see chart above my post!

---

That is the expenditure approach.

The price of net imports are included in C+I+G even though they were not produced locally. GDP doesn't go down up when you import less, it is just that C+G+I are understated by X-M.

If you were actually measuring output directly instead of backing into output using consumption, imports have zero impact on production.

Just think about it at the margin. When you import one widget, domestic output does not go up or down with that one widget. You haven't made anything else. It's just that this widget's price is included in the price of all consumed goods in the nation, whether imported or not, and then back out you back out all imports (including your widget) and add all exports. GDP was $100 before you bought the widget for a $. Now C+I+G in your formula is overstated by $1, because it is included in G. So you have to back it out with X-M.

The key here is that the reason why GDP is growing is not directly related to lower imports. Domestic production is increasing, replacing exports. That is what is cool.

---

Good grief! The primary reason GDP is at 3% this month is because imports went down, which you claimed was impossible. The chart above my original post is not hard to read for most people! You are incorrect and all the nonsense you typed above doesn't change that.

---

There is a difference between a mathematical relationship between two numbers and real-world causation.

It's wrong to say that the reduction in imports was the cause of GDP growth. It is interesting that GDP growth and the reduction of imports happened at the same time, though.

Imports only affect the calculation as you presented it because you are measuring expenditures to estimate production, and expenditures and production are not the same.

---

You do not understand this at all. We include X - M because imports are what we do not produce! But X is what we do produce and do NOT sell in the US; it's not counted in the C. It has to be added back in. Thus, we have X - M to reflect domestic only production in GDP! If we did not do that, then GDP would be incorrect because C would not include X and the imports would be potentially counted as consumer spending, even though we did not produce it!

The real world cause - because it actually happened in the real world - was a drop in imports! If you take out exports and imports, GDP would be - 1.99%. That is a contraction!

---

Ok, I think we are cooking with grease.

You have to add in X, because it is produced here, and isn't in consumption. And then you have to remove Imports, because imports were measured in consumption but not produced here. But, the only reason you remove imports the consumption was counted. If you have $5 trillion in imports consumed by the US, and therefore counted in consumption, and then removed all $5 trillion in this consumption, you would be doing the math right. But, the math is right no matter how big M is. If it was included in C at $1 or $1 Trillion, if you add it into consumption, and then take it out of consumption, it doesn't impact production.

Aggie Jurist said:

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Quote:

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Cut or two won't help the housing market. It's the home prices that are causing the problem. A little lower interest rate will not move the needle. Home prices coming down is the only thing that will fix that other than a cut so large it would tank the economy.

---

says someone not in the market.

I close on a home tomorrow - had to buy down the rate.

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Has nothing to do with being in the market. You obviously had the ability to buy down the rate which means cutting rates didn't affect you buying a home or not which ultimately doesn't change the supply and demand model. The problem is the millions of Americans who can't afford the monthly payment on the home because of the price regardless of whether the interest rate is at 7, 6, or 5 %. My statement stands cutting the interest rates won't have that big of an effect on the housing market. The cut they would have to do to effect it would have really bad consequences.

LOL . . .the two dissenting members are Chris Waller and Michelle Bowman, Trumps only two appointees who both are really angling for the soon to be vacant Fed Chairperson role.

Be thankful for ideologues like this. Creates wonderful opportunities to make 20%+ in 3 months.

The "normal" tie between interest rates and inflation is that 'easy money" will increase demand for goods, driving up prices and thus inflation. If the tariffs are really a "tax", then you can't use this argument. They don't take into account a federal tax hike when deciding interest rates and inflation, do they? … so why are they treating tariffs as inflation….it has nothing to do with money supply.
Seems like the fed board isn't thinking differently, just the same old method applied to a new world, which is surprising.

I'm I right?

LMCane said:

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the only reason GDP growth was much lower in the FIRST Quarter -

was because of a massive amount of imports of everyone trying to beat the tariffs.

---

So I think the fair way to analyze this is to average the first quarter GDP (negative) and second quarter GDP (very positive) since the swings either way were import driven.

Would put average GDP growth at 1.25% for the first two quarters. Not all that great.

Quote:

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The "normal" tie between interest rates and inflation is that 'easy money" will increase demand for goods, driving up prices and thus inflation. If the tariffs are really a "tax", then you can't use this argument. They don't take into account a federal tax hike when deciding interest rates and inflation, do they? … so why are they treating tariffs as inflation….it has nothing to do with money supply.
Seems like the fed board isn't thinking differently, just the same old method applied to a new world, which is surprising.

I'm I right?

---

No, you are not correct in that there is no direct linkage between federal taxes and the price of a good. It may have a second or third derivative effect by reducing household income which in turn depresses consumer spending which lowers demand which results in less production but it doesn't play a role in the key frameworks of monetary theory.

Tariffs, on the other hand, immediately and artificially change the cost of production of a good which, as most of economic history indicates, results in that extra cost being passed on to consumers in form of higher prices. There is a direct link between tariffs and increased prices aka inflation. As most economists point out (including most every Fed official that has discussed the matter) it is not a self sustaining link like the 70s wage price spiral but more of a step function that pushes up the baseline price one time in a big way assuming nothing else changes.

Friedman posited that MV=PQ. The amount of money in the system (M) times the speed at which it changes hand (velocity of money) = Price of Goods (P) times Quantity of Goods (Q). If there too money trading hands to quickly, i.e. MV is growing then either the price of goods jumps or the production of goods jump.

In regards to tariffs, the P is being forced higher by government policy . . . .we will see what happens. Usually V drops because people buy less and just let money sit in the bank account. Federal income tax doesn't really fit into that model.

Good business people should always be running this country. They know what it means to serve. Politicians are just self-serving parasites.

That's my point…tax hikes don't fit the current model, so maybe tariffs should be looked at differently than just plugging into a formula that merely says it a cost increase. A federal tax hike or a tariff both essentially do the same thing…reduce the overall purchasing power of the consumer. The government gets the money either way. While you point out that it is part of the calculation of inflation, it's not due to an oversupply of money or lack of goods.
So it's a different animal. So will cutting the interest rates really be a problem if you look at the the extra inflation caused by tariffs as an incremental tax that is acceptable.

BoydCrowder13 said:

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LMCane said:

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the only reason GDP growth was much lower in the FIRST Quarter -

was because of a massive amount of imports of everyone trying to beat the tariffs.

---

So I think the fair way to analyze this is to average the first quarter GDP (negative) and second quarter GDP (very positive) since the swings either way were import driven.

Would put average GDP growth at 1.25% for the first two quarters. Not all that great.

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Took Trump a couple of months to shake off previous administration bad policy.

MemphisAg1 said:

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Aggie Jurist said:

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Quote:

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This also pours cold water on Trump's demand for rate cuts.

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Not if the rise in GDP is attributable to lower energy costs, reduced regulatory burden, and repatriation of manufacturing investment. Rates are, no doubt, holding back growth.

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And inflation approaching 3% is still above the longstanding 2% target. There's just not a credible case for cutting rates right now.

And seriously, who has built a new factory in the US and hired thousands of workers since Trump announced his tariffs four months ago?

No one. That stuff takes time to come online (1 to 2 years) and make any kind of dent in national GDP. It very well might contribute in the future, but it's not a driver today.

---

🚨 HOLY CRAP! Trump just revealed auto production in the USA skyrocketed 36%.

The experts were wrong again.

Trump was right.

pic.twitter.com/jlAY2jZ9Zu

— Eric Daugherty (@EricLDaugh) July 30, 2025

Lower interest rates does impact homeowners. Developers and builders set prices based on costs and profit. The more it costs to carry land, crews etc- the higher the price goes...and they leverage (borrow) on the projects and rates have an impact. Heck, HUD secretary talked about this yesterday in a meeting

I have not seen what HUD guy said but they are looking g at some alternative ways to finance the trades, builders and potentially developers (more on financing horizontal development vs land acquisition).

To you point, the end mortgage rate is just a multiplier on already high rates and costs to get the house ready to sale.

Wrong, wrong, wrong!!!!! To the liberal mind, the economy is not booming because of Trump for what is happening is due to Biden's economic "policies".

Liberals are so ****ing dishonest. About everything.

2024 Elizabeth Warren: Jerome Powell needs to cut interest rates.

2025 Elizabeth Warren: Trump needs to stop calling for Jerome Powell to cut interest rates.pic.twitter.com/jDG15KJNBk

— MAZE (@mazemoore) July 30, 2025

Indian name mean Bear(er) of False Witness.

Looking back on this. It's truly incredible.

OBAMA: “When [Trump] says… that he’s going to bring all these jobs back. Well, how exactly are you going to do that? What are you going to do?”

Hey Mr. O @realDonaldTrump just waved his magic wand. pic.twitter.com/jvdxHSqzgC

— 💐Gigi💐 (@LovelyGigi33) November 3, 2018

I'm generally a staunch defender of the economics profession but the fact that an 80 year old reality show star and his ragtag crew of like 5 alabama university undergrads are running circles around 10 thousand PhDs for a year now does raise some questions one cannot ignore pic.twitter.com/jHq0qOJJDL

— yung macro 年轻的宏观 (@apralky) July 28, 2025

mirose said:

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MelvinUdall said:

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Tex117 said:

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No need to cut interest rates...yet.

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Yeah, however a rate cut or two may help the housing market some, but in general I agree.

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Cut or two won't help the housing market. It's the home prices that are causing the problem. A little lower interest rate will not move the needle. Home prices coming down is the only thing that will fix that other than a cut so large it would tank the economy.

---

That doesn't make sense. Interest rates are one of two primary drivers of monthly payments and that's how the overwhelming majority of houses are purchased. Of course rates matter. At $325k which is the average in College Station a half percent delta on the interest rate is a $100/month difference in payment. Worse still it's $100 that doesn't get you any more home. When prices skyrocketed but rates were still sub-4% and often sub-3% people were buying homes as fast as they could get listed. Now with rates over 6% sales have slowed way down. The market is responding to higher rates. Yes a 5% drop in price nets the same payment delta but at the end of the day if the payment fits their budget people will buy the home regardless of price or rate, they just need a payment that works.

Fat Black Swan said:

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I'm generally a staunch defender of the economics profession but the fact that an 80 year old reality show star and his ragtag crew of like 5 alabama university undergrads are running circles around 10 thousand PhDs for a year now does raise some questions one cannot ignore pic.twitter.com/jHq0qOJJDL

— yung macro 年轻的宏观 (@apralky) July 28, 2025

---

That's such a great reflection of the modern left. 80 year old reality show star. Rag tag crew of five Alabama grads. Trump is objectively one of the most successful business men in the history of the world. He's significantly more accomplished than was Obama or Biden or Clinton when they took office. None of those three have any accomplishments at all outside of elected office. Nothing. Then the swipe at Alabama is silly when you realize Trump himself has an Ivy League Economics degree.

This is what happens when you get a business minded person in the office instead of a government minded one. Remove the handcuffs and let American businesses do their job. Just get government out of the way for a minute.

LOYAL AG said:

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mirose said:

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MelvinUdall said:

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Tex117 said:

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No need to cut interest rates...yet.

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Yeah, however a rate cut or two may help the housing market some, but in general I agree.

---

Cut or two won't help the housing market. It's the home prices that are causing the problem. A little lower interest rate will not move the needle. Home prices coming down is the only thing that will fix that other than a cut so large it would tank the economy.

---

That doesn't make sense. Interest rates are one of two primary drivers of monthly payments and that's how the overwhelming majority of houses are purchased. Of course rates matter. At $325k which is the average in College Station a half percent delta on the interest rate is a $100/month difference in payment. Worse still it's $100 that doesn't get you any more home. When prices skyrocketed but rates were still sub-4% and often sub-3% people were buying homes as fast as they could get listed. Now with rates over 6% sales have slowed way down. The market is responding to higher rates. Yes a 5% drop in price nets the same payment delta but at the end of the day if the payment fits their budget people will buy the home regardless of price or rate, they just need a payment that works.

---

If you think the fed is going to cut enough to get back to 4% or sub 4 interest rates then you are living in a fantasy world. The basis of my statement here is they will only cut to get just below 6 or 5.5 and that won't move the market as much as people think. By your theory you he housing market should have seen a significant increase of buyers with they lowered the rates at the end of 2024. That just didn't happen. Check the data.

mirose said:

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LOYAL AG said:

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mirose said:

---

MelvinUdall said:

---

Tex117 said:

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No need to cut interest rates...yet.

---

Yeah, however a rate cut or two may help the housing market some, but in general I agree.

---

Cut or two won't help the housing market. It's the home prices that are causing the problem. A little lower interest rate will not move the needle. Home prices coming down is the only thing that will fix that other than a cut so large it would tank the economy.

---

That doesn't make sense. Interest rates are one of two primary drivers of monthly payments and that's how the overwhelming majority of houses are purchased. Of course rates matter. At $325k which is the average in College Station a half percent delta on the interest rate is a $100/month difference in payment. Worse still it's $100 that doesn't get you any more home. When prices skyrocketed but rates were still sub-4% and often sub-3% people were buying homes as fast as they could get listed. Now with rates over 6% sales have slowed way down. The market is responding to higher rates. Yes a 5% drop in price nets the same payment delta but at the end of the day if the payment fits their budget people will buy the home regardless of price or rate, they just need a payment that works.

---

If you think the fed is going to cut enough to get back to 4% or sub 4 interest rates then you are living in a fantasy world. The basis of my statement here is they will only cut to get just below 6 or 5.5 and that won't move the market as much as people think. By your theory you he housing market should have seen a significant increase of buyers with they lowered the rates at the end of 2024. That just didn't happen. Check the data.

---

I'm not assuming anything in where mortgage rates land post cut. If I'm doing that I think we see mortgage rates rise in the wake of a rate cut which is what happened in 2024. Mortgages are based on the 10Y Treasury and when they cut rates in 2024 we saw the 10Y increase in response. There's not a direct link between the Fed rate and mortgage rates.

All that aside .5% is $100/month on an average house in this market. Theres no world where $100/month doesn't matter to people taking out a mortgage to buy a house at that price point. That's illogical. It doesn't matter if you're going from 3% to 2.5% or 17% to 16.5%. $100 matters to people holding a mortgage on a house at that tier of the market.

I don't think he's saying interest rates don't impact mortgage cost, because they clearly do.

Instead, the key issue impacting housing right now isn't interest rates. They are normal compared to long term averages.

The key issue is the price of homes, driven by much larger homes than normal over time and more expensive cost per square foot than inflation adjusted averages.

The 15+ years after the Financial Crisis of 2008 saw artificially low rates which allowed much more expensive homes to be built and reset the market expectation for home prices.

With interest rates now at normal levels, it's going to take some time…. a long time, for home prices to revert back to the mean. But it will happen gradually.

Interestingly, if rates were to be managed artificially low again, it would just reinflate the home pricing bubble.

wonder how all the institutional investors who sold in April 9 are feeling this morning

LMCane said:

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wonder how all the institutional investors who sold in April 9 are feeling this morning

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Pretty good as many started buying back in after the markets overreacted and people listened to Jerome Powell, Jamie Diamon and Jim Cramer for their economic outlook.

MemphisAg1 said:

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I don't think he's saying interest rates don't impact mortgage cost, because they clearly do.

Instead, the key issue impacting housing right now isn't interest rates. They are normal compared to long term averages.

The key issue is the price of homes, driven by much larger homes than normal over time and more expensive cost per square foot than inflation adjusted averages.

The 15+ years after the Financial Crisis of 2008 saw artificially low rates which allowed much more expensive homes to be built and reset the market expectation for home prices.

With interest rates now at normal levels, it's going to take some time…. a long time, for home prices to revert back to the mean. But it will happen gradually.

Interestingly, if rates were to be managed artificially low again, it would just reinflate the home pricing bubble.

---

I get all that but nobody shopping for a house today cares that rates are good compared to long term averages. That's how economists and policy nerds like us think. People are transactional meaning they buy homes and they buy mortgages and a lower rate makes buying easier. If rates fall people will conclude that buying is more affordable and they'll shop and buy. Lower rates = lower payments = higher demand for house and mortgages. Yes we'd see prices increase over time but that won't matter to the person that today can't afford the payment and tomorrow can simply because the rate fell.