Stagflation is Here.
- Ed Sullivan
- Jul 31
- 2 min read
Updated: Oct 18
Market Update
This week’s economic data, on its surface, presents a stronger than expected economic picture. Headline GDP growth of 3% exceeded most expectations even in the context of slower consumer spending. Headline consumer confidence edged up, although the present situation index eased a bit. Inflation measured by the personal consumer expenditures came in at 2.8% year-over-year, a bit stronger than expected - and now stands a tic higher than the level began earlier this year.
Combined, these data suggest the economy’s resilience is intact. Solid economic growth and slightly rising inflation is the context in which the Federal Reserve decided to hold rates steady.
Then came the jobs report. Roughly 150,000 net new jobs monthly reflect a comfortably growing economy. Monthly job creation for July slowed to 73,000 net new jobs. June job creation was revised down considerably, from 147,000 net new jobs created to only 14,000 net new jobs. Strong job creation has been a key factor in the economy’s resiliency over the past few years.
Finally, tariffs took center stage. Several companies reported tariffs had an adverse impact on their earnings. General Motors calculated that tariffs will cost them between $4 billion to $5 billion in 2025. These assessments were followed by the Administration’s announcement of higher tariff rates, particularly on Canada.
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