From WSJ July survey out today:
Figure 1: GDP (bold black), WSJ July survey mean (tan), lowest/highest 10% based on 2025 q4/q4 growth (gray lines), GDPNow of 7/9 (inverted light blue triangle), NY Fed nowcast of 7/11 (red square), all in bn.Ch.2017$, SAAR. Source: BEA, WSJ, Atlanta Fed, NY Fed, and author’s calculations.
Only one forecast is for two consecutive negative quarters of GDP growth (AC Cutts, five consecutive quarters), while there are many forecasts of an individual quarter of negative growth.
The WSJ survey mean trajectory is close to the May SPF median. Not surprisingly, the WSJ growth rate for Q2 is just between the Atlanta and NY Fed nowcasts (see here).
A cautionary note from the WSJ:
Diane Swonk, chief economist at KPMG US, cautioned that official economic indicators, which combine actual data from surveys with estimates, often struggle to capture inflection points.
“As good as our stats are, they just weren’t made for these kinds of very large moves in policy that cause a knee-jerk reaction,” Swonk said. “It makes it even harder to read the tea leaves.”
Trump’s policies—which besides tariffs include a clampdown on illegal immigration, stepped-up deportations and a just-signed megabill cutting taxes and some spending—may also take time to filter into the real economy.
Last week Scott Bessent made a strong move in his audition for the next Federal Reserve chair with this statement:
“The president is the most economically sophisticated president, certainly for 100 years, perhaps in history.”
Today Kevin Hassett makes his counter move with: “The thing about President Trump is he became one of the most successful if not the most successful businessman in the 20th century.” You know, the guy who had six bankruptcies. Can he do the same for the US government?
Scott Bessent and Kevin Hassett are now running neck and neck in the sycophancy race to the Fed. They are practically anagrams of each other. It’s hard to keep them straight.
Just to repeat, stall speed for the U.S. economy is around 1.5%. These forecasts suggest we’re slowing to stall speed.
If the felon-in-chief continues to inject uncertainty into economic decision-making, on top of the harm that is being done be the actual imposition of his policies, odds of recession increase.
The felon’s pattern of behavior suggests that many of his announcements are aimed at drawing attention away from news he doesn’t like. The more news he doesn’t like, the more he tries to distract.
Seems like the Epstein list accounts for his decision to blow up trade talks with Europe and Canada:
https://www.nbcnews.com/politics/trump-administration/trump-faces-revolt-maga-base-epstein-files-rcna218385
Shudder to think what happens at BEA when GDP reports are persistently bad. Wonder what bad decisions he’ll make to distract from recession.
Johathan Karl interview professional liar and pretend economist Kevin Hassett on various aspects of the Trump tariff nonsense. Hassett made a fool out of himself on the Brazilian issue and then turned to copper:
KARL: Okay. I’m still confused, but let me move on. Let me ask you about the 50 percent tariff that the president has imposed on copper imports. Copper, of course, is widely used in construction, industrial manufacturing, cars, mobile phones, and the like. This is what “The Wall Street Journal” had to say about these tariffs: “Mr. Trump is going to make U.S. firms pay 50 percent more for a vital metal while they wait five or more years for U.S. sourcing. How does making it more expensive to build aircraft, ships, and ammunition promote national security? This is national insecurity.” What’s your response to “The Wall Street Journal”?
HASSETT: Right. The bottom line is that if there is a time of war, then we need to have the metals that we need to produce American weapons, and copper is a key component in many American weapon sets. And so, as we look forward to the threats that America faces, the president decided that we have plenty of copper in the U.S., but not enough copper production. And that’s why he’s taken this strong step.
KARL: But are you concerned about the effect of higher copper prices before American manufacturing can get up to speed?
HASSETT: The fact is that that effect that you’re just discussing is something that you mentioned that economists said were going to be coming all year, these effects, and inflation is way, way down. In fact, inflation in the U.S. is right about the same level as it is in Europe. And so, the tariffs have worked the way that we said. And so, I guess the expectation would be that the countries and the people that are dumping into the U.S. would bear most of this tariff.’
There are two major problems with Hassett’s babbling here. First of all if the foreign copper producers were bearing the cost of the tariffs (they are not) that would undermine the entire purpose of encouraging domestic copper mining. But this point has been made many times by smart economics who have belittled the ever changing justifications for Trump’s tariff nonsense. I guess Kevin isn’t that bright.
But he is flat out lying about copper prices in the U.S. not being affected by the tariffs. Global copper prices were $4.35 per pound, which is quite high. But after Trump announced his copper tariffs, the New York based copper future price jumped to around $5.60 a pound. Only someone who wrote DOW 36000 could see a 30% jump as a decline in copper prices.
Kevin Warsh has been on faux news, campaigning to replace Jay Powell as Fed Chair. Warsh has had a fire lit under him by a recent WSJ report that Kevin Hassett has also expressed interest in Powell’s job. Here’s what Warsh had to say:
https://www.foxbusiness.com/economy/former-fed-governor-says-trump-right-frustrated-powells-restrictive-policies
It isn’t pretty. Warsh made overt political statements, something Fed officials and aspirants to the Fed don’t do. Well, didn’t do until now. The felon-in-chief has made clear that Fed policy should be political and Warsh is happy to oblige. So is Hassett, by the way; he has now turned from defending Fed independence to harsh criticism of Jay Powell, aping the felon’s own behavior.
Warsh said both that rates should come down and that he would “Run the printing press a little bit less”. What? That’s just babble, though babble probably won’t hurt his chances. Actual technical expertise is beside the point these days. Warsh also said he wants to reduce the Fed’s asset holdings AND bring down yields across the curve. More babble. He was talking to Kudlow, who has a history of similarly innane statements about how interest rates, the economy, foreign exchange, equities and all of human society work, so no harm done, I guess.
For now, we have the rest of the Open Market Committee to rein in whatever the coming chairman-with-no-clothes has in mind. Let’s see how long that lasts.
Macroduck: “Warsh said both that rates should come down and that he would “Run the printing press a little bit less”. What? That’s just babble, though babble probably won’t hurt his chances. Actual technical expertise is beside the point these days. Warsh also said he wants to reduce the Fed’s asset holdings AND bring down yields across the curve.”
Does Warsh even have the vaguest idea that what he is saying is absolutely contradictory. The Fed selling bonds increases supply and reduces prices, which increases yields. Likewise, running the printing press a little bit less means the Fed buys fewer bonds, increases supply and reduces prices, which increases yields.
Warsh served on the board of governors a couple decades ago so he can’t really be this dumb, can he? Which means that he is knowingly lying to appease his boss in a play for the Fed chair.
It’s getting to be a crowded race for the Fed chair with Bessent and the two Kevins all debasing themselves to prove their loyalty to the Dear Leader.