There’s a ‘scary’ recession warning in the too-good-to-be-true data

In a memorandum on Tuesday, economists, Tim Quinlan and Shannon Green, rejected the “wrong narration” that the customs tariff had a benign impact, noting that consumer spending data had already been revised much less than previous optimistic readings.

They wrote: “It was unprecedented that spending on consumers was not completely annoyed by the sudden implementation of the definitions.” “This mirage has continued through the initial estimates of GDP growth that linked the pace of consumer spending on inflation by 1.8 % (annual); this is three times faster than it turned out to be in the third estimate -0.5 % only.”

In fact, data on services spending was more deviating to the upward trend, as reviews put only 0.6 % growth, decreasing from a preliminary print of 2.4 %.

These trends continued in the second quarter and a clear warning sign that is largely ignored, that is, families already reduce their appreciation spending, according to the note.

While the estimated spending on the goods has withstood, spending on services decreased by 0.3 % to May on an annual basis.

Quinlan Wrgrin warned: “It is recognized that this is a modest decrease, but what makes it frightening is that within 60 years, this procedure only decreased during the recession or immediately after that.”

They pointed out that spending on food services and recreational services, which include things such as membership of the gym and broadcasting subscriptions, is barely higher.

Meanwhile, transport spending decreased by 1.1 %, led by declines in car maintenance, taxis, passenger exchange, and air travel, which was a sharp decrease of 4.7 %.

“The fact that families postpone cars, not to seize Uber, reduce air travel points, or eliminate the budgets of the extended families,” said Wales Vargo.

Even increases in spending on goods seem weaker than they look, as categories such as cars and devices have seen large storms that have not been sustained. This is because consumers rushed to buy the elements before Trump’s tariff raised prices, and attracted purchases forward earlier in the year.

In addition, silent inflation data seems to be misleading as well, as economists wrote. Several companies have stored additional stocks before the customs tariff and were able to rely on this supply, allowing them to avoid passing the costs of definitions for consumers at the present time.

They added that Trump’s approach to the approach and out of the customs tariff may also delay these successes and even encourage some companies to eat costs, especially if the customs tariff is considered a temporary tactic of negotiations.

“There is another very good development regarding the tariffs is how extensive inflation measures have not been recorded after a disturbing inflationary shock,” said Queenn and Green.

Others in Wall Street are less occurrence, but they still see the definitions weighing the economy. Capital Economics see a tariff that causes slow but not a recession, as GDP grows 1.6 % this year and 1.5 % next year.

JPMorgan expects 1 % growth in the third quarter, about stability with gains in the first half of the year, which witnessed a contraction in the first quarter and the apostasy in the Q2.

The most contradictory Wells Fargo’s view comes amid a sharp debate about the economic view and whether the Federal Reserve should resume discounts in interest rates sooner, not later.

The governor of the Federal Reserve, Christopher Waller, pointed out that the readings readers are weak in the argument of reducing the rate of this month. But other policy makers prefer to wait, saying that the economy was flexible while the customs tariff has not yet appeared in inflation data.

The retail sales report issued on Friday showed a greater leap than last month with broad gains. But this data set often covers the spending on goods.

Meanwhile, the last consumer price index came less than expectations again, but it still shows signs that the customs tariff was pressuring inflation on inflation in addition to indications that poor demand may limit companies’ ability to rise.

“Consumer spending is not simply strong as we previously thought that it was or even as it was reported,” said Wales Vargo. “We have long seen the opinion that the stable labor market can compensate for inflation caused by customs tariffs, and this may still be true and will prevent more motivation in stagnation from this. But consumers have transformed their behavior in the wake of definitions.”