I’m still trying to figure this out. From Fortune via Yahoo Finance Nick Lichtenberg reports:
One of Wall Street’s most closely watched voices delivered a blunt message to peers and policymakers: The U.S. economy is not faltering—it is accelerating. Torsten Sløk, chief economist at Apollo Global Management, said forecasts of an imminent slowdown have been repeatedly wrong, and the economics profession should start grappling with its track record of misjudgments.
“The consensus has been wrong since January,” Sløk said in a note circulated to clients Wednesday morning, adding that the average of economists’ forecasts has said the U.S. economy would slow down for nine months running. “But the reality is that it has simply not happened … We in the economics profession need to look ourselves in the mirror.”
Second-quarter GDP expanded at a 3.8% annualized rate, a strikingly strong pace given the Federal Reserve’s ongoing effort to tamp down inflation. The Atlanta Fed’s GDPNow model suggests growth may be even stronger in the third quarter, forecasting 3.9% gains. Many economists had expected the lagging impact of high interest rates, tighter credit conditions, and April’s “Liberation Day” market shock to drag growth meaningfully lower by now.
Instead, the data tells a different story. Consumer spending has continued to prove resilient, and business investment, far from retreating, has strengthened in sectors tied to artificial intelligence, energy infrastructure, and manufacturing reshoring. Housing, often sensitive to interest rates, has shown surprising stability in key regional markets. Sløk did not dive into these particulars in Wednesday’s edition of his Daily Spark, except to address slowing job growth. “This is the result of slowing immigration,” he wrote, not economic weakness.
“The bottom line is that the U.S. economy remains remarkably resilient,” Sløk emphasized. “It is becoming increasingly difficult to argue that we are still waiting for the delayed negative effects of what happened six months ago,” referring to President Trump’s Liberation Day and the imposition of sweeping reciprocal tariffs. One top analyst has been arguing for years that most of Wall Street was wrong, and that Liberation Day represented the end of the beginning, rather than the beginning of the end.
Hiring is basically stalled. Consumer credit is rising but not extraordinarily so. Possible explanations that occur to me are:
- We’re still feeling the residual effects of the Biden Administration’s appropriations. A lot of that is just being spent now.
- We’re still feeling the effects of the spending spree that the Trump Administration, the Biden Administration, and the second Trump Administration have been on.
- No matter what’s happening here they’re worse everywhere else.
- Animal spirits
- There’s a lot of investment in the U. S., both by domestic companies and overseas
- Neoliberals have been wrong about globalization all along.
- The Chinese are dealing with their own economic issues by increasing production and exports.
- There are basic flaws with how we measure GDP, unemployment, etc.
- The effects of intergenerational wealth transfer
and those are just off the top of my head. I’m open to other ideas.
looked at some of these numbers a week ago. My impression is that growth and investment are overweighted in AI stuff. The manufacturing restoring peaked in 2022/2023. It’s still increasing but not as fast. There is some pent up demand for housing. Where we live there are lots of new homes going up and nationally I think the NIMBYs are losing some battles.
It looks like the FED is just going to accept 3% as the new standard. Should I be surprised that I dont hear conservatives complaining about this?
Steve
Bad (or disputed) data?
I ran across this article just this afternoon:
https://www.palladiummag.com/2025/10/03/how-gdp-hides-industrial-decline/
Quote I pulled from near the end:
“The point is not that any of these methods is right or wrong. The point is that if you have a half-dozen plausible ways of adjusting for quality, none of which from first principles is more objective than another, and you rule out one method for giving ludicrously low results, and one method for ludicrously high results, and just choose a middle route that feels reasonable, then the result of this adjustment is not an objective measure of output. All you have done is launder vibes into something that has the appearance of an objective number.”
Piercello: Bad (or disputed) data?
Let’s start with something simple, the idea of an estimate. Is it objectively true that US GDP is larger than the GDP of, say, Belgium or Egypt? Given that it is, then it means there is some objectivity to GDP, GDP is not just laundered vibes, even if the estimates can have high error margins and systemic biases.
True. But the US fraction of global manufacturing of “things” is decreasing, and US manufacturing represents a smaller share of US GDP. That’s because the world is awash in manufactured “things”. “Things” are almost everywhere, so the value of “things” is not what it once was.
Educational administrators are not counted as manufacturing.
An increase in quality can result in an increase in GDP when the higher quality product commands a higher price compared to competitors. So, a Tesla Model S contributes more to GDP than a Nissan Versa.
While GDP is “a very complicated statistical construct”, the data and methods are publicly available, and other economists make their own estimates.
“Things” are not the only thing people value. The Beatles produced value too, even if it was intangible. Then again, maybe only food stuffs should be considered. Everything else, like Labubu, is just fluff. Google is just a platform for ads. But for some reason, people keep giving them money, and with that money, Google employees buy houses, food, cars, and Labubus (manufactured in China, meaning the Chinese think Google money is real money for some reason).
And yet, the most advanced chips are designed in the United States. That’s valuable.
I dunno, the economy feels weird again.
Here in Colorado, unemployment is now above the national average, and the growth we’ve seen over the last decade has slowed considerably. Housing prices seem to have plateaued, at least along the Front Range, and construction is down.
My field is still slow down, not helped by the tariffs.
I can’t really make any kind of prediction about where things go from here.
For completeness, here’s a point-by-point rebuttal of the article I linked earlier:
https://totalhealthoptimization.com/2025/10/05/errors-in-palladiums-how-gdp-hides-industrial-decline/
Piercello: For completeness, here’s a point-by-point rebuttal of the article I linked earlier:
“Fractally wrong”. Hahaha!
“There are basic flaws with how we measure GDP”
I wonder how much the GDP measurement is being distorted by the change in tariffs. Financial incentives have changed in transfer pricing. Transfer pricing is the reported value of a good being imported into the US. For example, if we have a pair of shoes being made in Turkmenistan with a manufacturing cost of $25 that is imported into the US and sold for $100, what does the company say the value of the shoes is on the import paper. For simplicity, let’s say a US company owns the value chain (the same manufacturer produces imports and sells the shoes). Prior to the tariff increase, the company would want to say the value to the shoes being imported was high because corporate tax rates in Turkmenistan are lower than the US (8% vs 21%). Let’s say they say the imported value of the shoes is $100. This means the sale of the shoes at $100 gave $0 of added GDP in the US.
With tariffs, they want to minimize the tariff payment, so now they value the same pair of shoes at $25 for import purposes. Now, the sale of this same pair of shoes adds $75 to GDP.
Overall, it is the same pair of shoes to the same customer at the same price, but the reported GDP in the US has increased. That is not a real increase in production or represent any growth in the economy.