July 22, 2025
It has been a busy month with regard to economic news. We started the month with the passage of a huge tax and spending bill and the release of a stronger-than-expected jobs report. These events were followed almost immediately with additional announcements of increased tariffs to be levied upon several countries. Of course, we should have suspected that these announcements were part of a strategy we will describe as “let the games begin.” In other words, there will be a lot of back and forth in this regard.
As the month progresses, there is always a plethora of economic data to follow. For example, last week we had readings on inflation. In the past few months, inflation has continued to ease, but the analysts seem to be waiting for the other ball to drop in the form of tariff-induced inflation stimulation. This month the most important report is the release of the first estimate of economic growth for the second quarter. The release of the GDP estimate will happen the morning of the second day of this month’s Fed meeting – July 30th.
What makes this number important? We experienced negative economic growth in the first quarter. A second quarter of negative growth will certainly raise the specter of a recession. Thus far, the Fed has been banking on the resilient job market to fend off a recession while they assess the effect of tariffs on inflation. A negative growth rate for the second quarter could signal to the Fed that all bets are off in that regard. On the other hand, a positive report could ensure that the Fed will stay on the sidelines for a few more months.
Source: Origination Pro
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