BREAKING: GDP Growth Revised WAY Down

The US GDP growth was revised from an initial estimate of 1.4-1.5% down to a mere 0.7% annualized rate. Katherine Rmpelle explains that initial government statistical agency numbers often rely on imputed or guessed data, leading to frequent revisions as more actual data is collected. She dismisses claims that government shutdowns were the primary cause, noting that even without that drag, growth would be around 1.7%, still below the 2% long-term average.

Original estimate 1.4-1.5%, revised to 0.7% annualized growth. Prior period 4.4% gain. Long-term average ~2%.

Inflation remains 'sticky' in the 2.4-2.8% range, consistently above the Federal Reserve's 2% target for about five years. Rmpelle attributes this largely to policies enacted, including tariffs, attempts to politicize the Federal Reserve, and policies affecting labor supply (e.g., deporting agricultural and construction workers). The war in Iran is expected to exacerbate these inflationary pressures, particularly on oil and gas prices.

Inflation in 2.4-2.8% range, Fed target 2%. Over target for ~5 years. Tariffs announced after 'Liberation Day' (April 2025) reversed a downward trend.

The economy is characterized by a 'low hiring, low firing environment' due to significant uncertainty. Businesses are holding off on plans, partly due to unpredictable costs from tariffs. This affects not only companies directly importing goods but also service companies whose clients are impacted. Younger people and those without college degrees are disproportionately affected by this lack of job churn.

Lost jobs in six of the last 12 months. Hiring among younger people and non-college graduates looks 'awful'.

The effective closure of the Strait of Hormuz, through which 20% of the world's oil and a large fraction of LNG passes, has severe global economic consequences. This disruption leads to production cutbacks (e.g., Iraq running out of oil storage) and forces downstream industries, like aluminum smelters, to shut down for months. Refineries also pace their operations to avoid running out of crude inputs, further limiting supply even if the strait reopens.

20% of world's oil, large fraction of LNG. Aluminum smelter in Qatar shut down, taking months to reopen. Iraq running out of oil storage.

The US administration is easing sanctions on Russian oil to alleviate global supply shortages caused by the war in Iran. This decision is criticized as short-sighted because Russia is simultaneously providing intelligence and medical care to Iran, effectively funding an adversary that is harming US service members. This move enriches Putin and strengthens Russia's military operations.

US eased sanctions on Russian oil with a 30-day waiver. Russia providing intel and medical care to Iranians.