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.
