Figure 1: Change since 2025M03 in private nonfarm payroll employment from BLS (blue), from ADP (red), 2023M04-2025M03 Stochastic trend (gray line), all in 000’s, s.a. Source: BLS, ADP via FRED.
About 1.9% of that is forecasted change in private inventories, which is way above average, and PCE is nowcasted at about 3.1%, as compared to somewhere in the 1.3% – 2.0% range it inhabited in Q2. Between those two, you’re seeing a boost of about 3 – 3.5% over what might be expected, leading to an “adjusted and meaningless number” of 2.4% – 2.9% without those two boosters.
GDPNow often begins its growth estimates for a given quarter far from where it ends up. GDPNow is entirely mechanical, no judgement allowed. That’s intentional, but can lead to some screwball estimates.
For now, personal consumption spending is assumed to add 2.85 ppts to Q3 growth mostly hecause PCE ended Q2 so strong. Here’s the picture, showing June vs Q2:
If, for instance, the World Cup pushed consumption unsustainably high in June, then PCE might fall short of what’s assumed in GDPNow.
Note also that, other than net exports, every component of GDP is assumed to add to growth. That might prove true, and it it does, Q3 growth will probably end up quite strong. Most quarters, some components impose a drag on growth. Professional forecasters, most of whom do exercise judgement in forecasting, mostly assume that GDPNow is exaggerating the pace of growth in Q3.
Treasury has lifted sanctions on an Iranian airline. But of course, the decision “was not indicative of any shift in U.S. policy towards Iran’s government, the Islamic Revolutionary Guards or any organization designated as terrorist and was unrelated to U.S. negotiations with Iran over a possible deal to end hostilities in the Gulf.”
It was an Iranian passanger flight into Yemen that sparked Saudi Arabia’s attack on the Sanaa airport, which in turn led the Houthis to ban Saudi shipping through Bab el-Mandeb. Thought I’d point that out.
“Treasury Secretary Scott Bessent said in an interview with CNBC on Tuesday that the U.S. and Iran could reach an agreement as early as Tuesday or Wednesday to reopen the Strait of Hormuz and restore freedom of navigation for commercial shipping.”
Today is Wednesday. No deal, and Iran insists that it is not talking with the U.S., only with Oman.
“A senior Gulf official familiar with the talks suggested there is about a 50:50 chance of a deal by Friday. One issue is that the Iranian delegation does not include the voice of the hardline Islamic Revolutionary Guard Corps (IRGC), which would have to sign off on the details, the source said.”
So, neither Tuesday nor Wednesday, but maybe Friday. The U.S. and Iran won’t reach agreement, but Iran and Oman might. Freedom of navigation? No, heavily supervised and restricted navigation.
One of the main objectives of the IRGC is to remain at war with “the great satan” – so they can die and go straight to heaven. Peace is horrible for them because then they will not know where they end up after death – and they might even lose power here on earth before they die.
ADP reported a pick-up in wage gains for job switchers in July, to 7.0% y/y, the best in 11 months. Could be noise, but it fits with the recent increase in job openings.
Here’s the picture of openings and job-switcher wage gains, as reported by BLS:
Wages track openings, with a lag. BLS has not yet reported an acceleration in wage gains for switchers, but we don’t have July data yet. Anyhow, there are signs of modest improvement in the labor market. We’ll see if they last.
War driven inflation pickup. My guess steady decline from here it is as long as inflation doesn’t rise, and the labor force isn’t gonna let it. World Cup caused a rise in job openings and explained the weird decline in in jobless claims earlier this year. Now claims are moving back at the pre world cup trend.
The World Cup is a big global economic mover, even more than the Olympics
Well, this should make Bessent some friends in Europe (sarcasm).
You heard about Bessent’s instructions to the Federal Reserve to intervene to prop up the yen by buying $10 billion of yen with US dollars. It turns out that the Fed got the cash for the transaction by selling euros. Except the ECB was completely blindsided. Bessent never informed the ECB until after the transactions took place.
This is a major break in protocol that has never happened before. Since WWII there has been close coordination between western monetary authorities.
A senior Trump administration official noted that “we respect the confidentiality of private discussions with our international counterparts, unlike the ECB”, adding insult to injury. Bessent is just a pugnacious, ignorant sh*theel.
So once again we have the Trump administration deliberately sticking their thumb in the eye of our allies — followed at some later date by Trump whining about how our allies won’t stick up for him.
We no doubt will face some catastrophic monetary crisis in the future and we may not be able to count on any international assistance.
There is absolutely no reason not to inform the ECB about something like this, and a lot of reasons you would give them a heads up.
The facts that we didn’t, is not just an indication of the cluelessness of Bessent; but also that no competent people are left below him who would make sure that things are done the right way. That lack of competence in itself is a bad sign for our ability to handle the upcoming crisis. Ignorant, incompetent nincompoops are not who you want steering the ship when you are heading into a storm.
Except, but, ’cause… EVERYBODY knew we had sold euros for yen! It was in all the press accounts. The Europeans didn’t say anything that wasn’t in the press.
We were arrogant. They weren’t. So we accuse them. ‘Cause we’re arrogant. And because, just possibly, nobody at Treasury these days knows enough about how things are done to realize WE DON’T SELL EUROS WITHOUT ASKING! At least, nobody with a voice knows this stuff.
And you gotta wonder if Jay Powell would have acquiesced to Bessent’s demands without giving a heads up to his counterpart, Christine Lagarde, at the ECB.
This debacle illustrates that Warsh is just a tool of the White House.
It is just another demonstration of Warsh being new on the job and not qualified. That is probably the biggest damage from this whole episode. He demonstrated to the whole world that Mr. Clueless is in charge of the US central bank. We will not have the credibility we need when the big wave hits.
Odds are, as soon as the Fed got the order from Treasury, the desk had to start selling euros; no useful delay. The ECB would not have known any earlier, just more politely, if Powell were still Chair. ‘Cause Bessent is not just a jerk to his international colleagues, he’s a jerk to all of his colleagues.
No, it is absolutely false that the desk had to start selling euros instantly with no delay. Maybe they had to to buy yen quickly, but Bessent isn’t the boss of the Fed. And there was no rush to sell euros without a heads up to the ECB. The Fed has a balance sheet of over $6 trillion. They as no panic necessary to sell $10 billion of euros.
The sale of euros was in the press but only after the transactions had already occurred. That’s no way to run a central bank.
What is the matter with you? Defending Bessent and Warsh? Sometimes I wonder where your head is at.
Agree, buying Yen doesn’t have to be linked to selling another currency. There probably was an exchange rate stability argument for selling some Euro’s, but no urgency (or connection to buying of Yen). Although its hard to imagine that level of idiocy in Bessent and Warsh; its almost as if they were saying “we like Japan better than EU; so we are buying Yen and selling Euro’s”. Maybe the Orange Idiot was involved in this?
Talking to the ECB before either of those transactions would be the competent way to handle it. The ECB might even have decided to take a few billion of the Yen buying off our shoulders, to get a little more weight behind the support for the Yen (making it less likely that anybody would dare to speculate against the Yen).
Making sure the ECB know about the sale of Euro’s before the market finds out is also in everybody’s interest. When the next crisis arrive it will be very important that everybody know, that they will know, what everybody else is doing. When shit hits the fan you don’t want everybody to act in a panic on what they think that everybody else probably maybe will be doing.
Some jobs are more value-added creating than others. Data center construction is a big lift to GDP, and much of domestic value added is construction workers, electricians and plumbers, along with chip designers. Add in lawyers and financiers, who are also a big part of AI at this stage. Here are a couple of ways of looking at intellectual property, to give a flavor of what may be driving the accounting anomaly you have in mind:
GDP nowcasting for Q3 2026 is at 5.9% today, seems high, someone can comment on the forecast?
https://www.atlantafed.org/research-and-data/data/gdpnow
About 1.9% of that is forecasted change in private inventories, which is way above average, and PCE is nowcasted at about 3.1%, as compared to somewhere in the 1.3% – 2.0% range it inhabited in Q2. Between those two, you’re seeing a boost of about 3 – 3.5% over what might be expected, leading to an “adjusted and meaningless number” of 2.4% – 2.9% without those two boosters.
World cup driven irrelevancy. GDP now is so bad, abolishment should be considered.
GDPNow often begins its growth estimates for a given quarter far from where it ends up. GDPNow is entirely mechanical, no judgement allowed. That’s intentional, but can lead to some screwball estimates.
For now, personal consumption spending is assumed to add 2.85 ppts to Q3 growth mostly hecause PCE ended Q2 so strong. Here’s the picture, showing June vs Q2:
https://fred.stlouisfed.org/graph/?g=1XOfO
If, for instance, the World Cup pushed consumption unsustainably high in June, then PCE might fall short of what’s assumed in GDPNow.
Note also that, other than net exports, every component of GDP is assumed to add to growth. That might prove true, and it it does, Q3 growth will probably end up quite strong. Most quarters, some components impose a drag on growth. Professional forecasters, most of whom do exercise judgement in forecasting, mostly assume that GDPNow is exaggerating the pace of growth in Q3.
Signs of progress?:
https://www.reuters.com/world/middle-east/us-removes-sanctions-three-irgc-linked-entities-treasury-website-shows-2026-08-05/
Treasury has lifted sanctions on an Iranian airline. But of course, the decision “was not indicative of any shift in U.S. policy towards Iran’s government, the Islamic Revolutionary Guards or any organization designated as terrorist and was unrelated to U.S. negotiations with Iran over a possible deal to end hostilities in the Gulf.”
It was an Iranian passanger flight into Yemen that sparked Saudi Arabia’s attack on the Sanaa airport, which in turn led the Houthis to ban Saudi shipping through Bab el-Mandeb. Thought I’d point that out.
“Treasury Secretary Scott Bessent said in an interview with CNBC on Tuesday that the U.S. and Iran could reach an agreement as early as Tuesday or Wednesday to reopen the Strait of Hormuz and restore freedom of navigation for commercial shipping.”
https://www.msn.com/en-us/money/general/us-iran-may-strike-hormuz-reopening-deal-as-soon-as-tuesday-or-wednesday-bes
Today is Wednesday. No deal, and Iran insists that it is not talking with the U.S., only with Oman.
“A senior Gulf official familiar with the talks suggested there is about a 50:50 chance of a deal by Friday. One issue is that the Iranian delegation does not include the voice of the hardline Islamic Revolutionary Guard Corps (IRGC), which would have to sign off on the details, the source said.”
https://www.cnn.com/2026/08/05/middleeast/hormuz-iran-oman-agreement-analysis-intl
So, neither Tuesday nor Wednesday, but maybe Friday. The U.S. and Iran won’t reach agreement, but Iran and Oman might. Freedom of navigation? No, heavily supervised and restricted navigation.
One of the main objectives of the IRGC is to remain at war with “the great satan” – so they can die and go straight to heaven. Peace is horrible for them because then they will not know where they end up after death – and they might even lose power here on earth before they die.
ADP reported a pick-up in wage gains for job switchers in July, to 7.0% y/y, the best in 11 months. Could be noise, but it fits with the recent increase in job openings.
Here’s the picture of openings and job-switcher wage gains, as reported by BLS:
https://fred.stlouisfed.org/graph/?g=1XPC7
Wages track openings, with a lag. BLS has not yet reported an acceleration in wage gains for switchers, but we don’t have July data yet. Anyhow, there are signs of modest improvement in the labor market. We’ll see if they last.
War driven inflation pickup. My guess steady decline from here it is as long as inflation doesn’t rise, and the labor force isn’t gonna let it. World Cup caused a rise in job openings and explained the weird decline in in jobless claims earlier this year. Now claims are moving back at the pre world cup trend.
The World Cup is a big global economic mover, even more than the Olympics
Well, this should make Bessent some friends in Europe (sarcasm).
You heard about Bessent’s instructions to the Federal Reserve to intervene to prop up the yen by buying $10 billion of yen with US dollars. It turns out that the Fed got the cash for the transaction by selling euros. Except the ECB was completely blindsided. Bessent never informed the ECB until after the transactions took place.
This is a major break in protocol that has never happened before. Since WWII there has been close coordination between western monetary authorities.
A senior Trump administration official noted that “we respect the confidentiality of private discussions with our international counterparts, unlike the ECB”, adding insult to injury. Bessent is just a pugnacious, ignorant sh*theel.
So once again we have the Trump administration deliberately sticking their thumb in the eye of our allies — followed at some later date by Trump whining about how our allies won’t stick up for him.
We no doubt will face some catastrophic monetary crisis in the future and we may not be able to count on any international assistance.
There is absolutely no reason not to inform the ECB about something like this, and a lot of reasons you would give them a heads up.
The facts that we didn’t, is not just an indication of the cluelessness of Bessent; but also that no competent people are left below him who would make sure that things are done the right way. That lack of competence in itself is a bad sign for our ability to handle the upcoming crisis. Ignorant, incompetent nincompoops are not who you want steering the ship when you are heading into a storm.
Except, but, ’cause… EVERYBODY knew we had sold euros for yen! It was in all the press accounts. The Europeans didn’t say anything that wasn’t in the press.
We were arrogant. They weren’t. So we accuse them. ‘Cause we’re arrogant. And because, just possibly, nobody at Treasury these days knows enough about how things are done to realize WE DON’T SELL EUROS WITHOUT ASKING! At least, nobody with a voice knows this stuff.
And you gotta wonder if Jay Powell would have acquiesced to Bessent’s demands without giving a heads up to his counterpart, Christine Lagarde, at the ECB.
This debacle illustrates that Warsh is just a tool of the White House.
It is just another demonstration of Warsh being new on the job and not qualified. That is probably the biggest damage from this whole episode. He demonstrated to the whole world that Mr. Clueless is in charge of the US central bank. We will not have the credibility we need when the big wave hits.
Odds are, as soon as the Fed got the order from Treasury, the desk had to start selling euros; no useful delay. The ECB would not have known any earlier, just more politely, if Powell were still Chair. ‘Cause Bessent is not just a jerk to his international colleagues, he’s a jerk to all of his colleagues.
No, it is absolutely false that the desk had to start selling euros instantly with no delay. Maybe they had to to buy yen quickly, but Bessent isn’t the boss of the Fed. And there was no rush to sell euros without a heads up to the ECB. The Fed has a balance sheet of over $6 trillion. They as no panic necessary to sell $10 billion of euros.
The sale of euros was in the press but only after the transactions had already occurred. That’s no way to run a central bank.
What is the matter with you? Defending Bessent and Warsh? Sometimes I wonder where your head is at.
Agree, buying Yen doesn’t have to be linked to selling another currency. There probably was an exchange rate stability argument for selling some Euro’s, but no urgency (or connection to buying of Yen). Although its hard to imagine that level of idiocy in Bessent and Warsh; its almost as if they were saying “we like Japan better than EU; so we are buying Yen and selling Euro’s”. Maybe the Orange Idiot was involved in this?
Talking to the ECB before either of those transactions would be the competent way to handle it. The ECB might even have decided to take a few billion of the Yen buying off our shoulders, to get a little more weight behind the support for the Yen (making it less likely that anybody would dare to speculate against the Yen).
Making sure the ECB know about the sale of Euro’s before the market finds out is also in everybody’s interest. When the next crisis arrive it will be very important that everybody know, that they will know, what everybody else is doing. When shit hits the fan you don’t want everybody to act in a panic on what they think that everybody else probably maybe will be doing.
Job report from today is dismal, only 26k jobs per month since Feb 2025.
Either we found a way to grow GDP 2-3% without adding jobs (where will the added consumption come from?), or there’s a problem in our accounting.
Some jobs are more value-added creating than others. Data center construction is a big lift to GDP, and much of domestic value added is construction workers, electricians and plumbers, along with chip designers. Add in lawyers and financiers, who are also a big part of AI at this stage. Here are a couple of ways of looking at intellectual property, to give a flavor of what may be driving the accounting anomaly you have in mind:
https://fred.stlouisfed.org/graph/?g=1XQSx
That probably can’t continue, nor can the work for plumbers and electricians.