A crisis of confidence.
That’s what we have as the Dollar hits new lows this morning – falling below 97 and down 13 points (11.8%) since Trump took office. That’s an 11.8% tax, NOT JUST ON YOUR INCOME, but on ALL of your assets – all the wealth you accumulated over your entire lifetime – THAT is the result of Trump’s fiscal policies…
But at least Bitcoin is doing well – back at $107,290 this morning as the weaker Dollar helps BTC as well. Of course, the average American doesn’t have any Bitcoin – they have Dollars but don’t worry, Donald Trump has Bitcoins and his family will be fine as the wealth is transferred from Dollars to Bitcoin.
Despite the fact that the worth-less Dollar boosts the apparent GDP (because you need more Dollars to buy the same things – so it LOOKS like growth), GDP this morning is likely to be NEGATIVE 0.2% and that is CONTRACTING DRASTICALLY from Q1. Technically, however, you need two consecutive quarters of negative GDP growth to qualify as a Recession and Trump has only had the one full quarter to destroy our Economy so far and, of course, CLEARLY this is Biden’s fault…
Biden also caused New Home Sales to fall from 722,000 in April to 623,000 in May (-13.7%) – that sneaky cyborg is everywhere! And this is the time of year when sales usually go UP, as families like to time their moves when the kids are off from school. The average PRICE of a home, however, is UP 4.6% from last year – now $522,200 – more than double what it was before the 2008 housing market melt-down.
Mortgage rates, now hovering near 8%, are locking out first-time buyers and freezing up the move-up market. Homebuilders, who should be celebrating peak season, are instead slashing prices and piling on incentives just to keep inventory moving. But don’t worry – according to the official narrative, this is all part of Trump’s “strong economy” and, if you’re feeling the pinch, you are probably just not working hard enough or praying hard enough (maybe to the wrong God?), perhaps, you’re simply not holding enough Bitcoin.
Meanwhile, the cost of everything else continues to climb. Grocery bills are up, gas is flirting with $4 a gallon again despite oil’s recent dip, and even your morning coffee costs more – unless, of course, you’re paying in Bitcoin, in which case you’re probably just bragging about your gains instead of worrying about the price of a latte.
And yet, as the Dollar tumbles and the average American’s purchasing power evaporates, the stock market continues its gravity-defying act, fueled by a cocktail of algorithmic optimism, buybacks, and the faint hope that maybe, just maybe, the next Fed meeting will bring relief. But with Inflation set to spike again as tariffs ratchet up in July (2 weeks!) and, with the Fed boxed in by politics and policy missteps, it’s hard to see where the good news is coming from, unless you’re measuring your wealth in something other than Dollars.
So, as we watch the wealth gap widen and confidence erode, remember: It’s not a recession, it’s not a crisis, it’s just the new American normal. And if you don’t like it, well… maybe you should have bought Bitcoin – or not voted for the guy who promised to replace your Dollars with his own personal coins…
8:30 Update: MINUS 0.5%! That’s 150% worse than -0.2% expected for GDP and the GDP Deflator (inflation) is up 0.1% to 3.8% – not at all down as they would have you believe. Durable Goods are up an amazing 16.4% but it’s all aircraft orders. Without them, we’re only up 0.5% but that’s better than 0% in April but it certainly doesn’t make up for the GDP disaster – and we haven’t even started the tariffs yet!
Keep in mind the GDP Deflator at 3.8% is essentially DOUBLE the Fed’s 2% target so when, exactly, are we expecting that rate cut? Record high markets, still high inflation, tight labor market – the Fed should be looking to RAISE rates at this point!
The Big Picture: Stagflation Risks are Mounting
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Growth is negative and inflation is rising—the classic stagflation cocktail.
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The Fed is in a bind: Powell and the FOMC have made clear they want to wait for more data before cutting rates, especially with tariffs threatening to push inflation even higher in Q3 and Q4 1 3 4.
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The GDP deflator at 3.8% is a clear warning that price pressures are not abating, and with tariffs set to escalate after July 9th, the next few inflation prints could be even hotter 2 4.
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Policy and Market Implications
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No July rate cut: Powell’s testimony this week reinforced that the Fed is on hold for now, with the earliest likely cut in September—if at all 1 3.
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Sticky inflation: Even as growth falters, inflation is not coming down, which means the Fed can’t easily pivot to stimulus without risking even higher prices.
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Market risk: The “bad news is good news” trade (weak growth = rate cuts = higher stocks) is breaking down. If inflation stays sticky, further downside for equities is likely, especially in rate-sensitive sectors.
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Tariff impact still to come: The latest data doesn’t even reflect the full brunt of the new tariffs, meaning further economic pain is likely in the second half of 2025 2 3 4.
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Bottom Line
This morning’s data is a triple whammy:
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Growth is sharply negative,
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Inflation is ticking up,
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And the only “good” news in Durable Goods is a statistical illusion.
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The U.S. economy is already deteriorating before the next round of tariffs hits. The Fed is stuck, the market is vulnerable, and policymakers are running out of room to maneuver. If you’re looking for a silver lining, you’ll have to dig deeper, because the headline numbers just flashed a major warning for the second half of 2025.
