It’s Only Money
Market Highlights
Stocks pulled back a bit this week, with the S&P 500, Dow, and Nasdaq each slipping around half a percent. The economy, though, showed more strength than forecast. Second-quarter GDP was revised up to 3.8%—the fastest in almost two years—driven by steady consumer spending and stronger business investment. Weekly jobless claims also fell to about 218,000, a sign the labor market is holding up.
That resilience is a mixed bag. It keeps recession fears at bay, but it also gives the Fed less reason to cut interest rates anytime soon. Investors had been betting on easier money ahead, but now the timing looks less certain. Oil prices added pressure, jumping more than 4% as supplies tightened, and new tariffs on heavy trucks and pharmaceuticals created fresh concerns for certain industries.
Bottom line: the economy looks healthy on paper, but markets are jittery, waiting for next week’s inflation and jobs data to see what the Fed does next.
On My Mind
The Forecasts vs. The Facts
Second-quarter GDP just got revised up again — now clocking in at 3.8%. It started at 3.0, then 3.3, and now almost 4%. That’s not a minor tweak, that’s a trend of underestimating the strength of this economy. And while the Atlanta Fed’s GDPNow model sees the third quarter running at 3.3%, the Federal Reserve is still projecting a meager 1.6% growth rate for the year.
Meanwhile, the jobs story flipped the other way. The Bureau of Labor Statistics recently admitted that the U.S. actually added 911,000 fewer jobs over the past year than first reported. Nearly a million “phantom” jobs vanished in one revision.
So we’re left with a peculiar mix: growth projections were underestimated and the employment numbers were being overestimated. The reality checked their math and it’s not impressed by forecasts that keep missing in both directions. The Fed blames tariffs and other headwinds, but the scoreboard says consumers kept spending and the economy kept moving.
The bigger lesson? Reality is running circles around the models. The economy isn’t following the script the experts keep handing out — and the gap between forecast and fact is getting harder to ignore.
On This Day in History
September 24, 1869 — “Black Friday”
Jay Gould and Jim Fisk tried to corner the U.S. gold market, buying massive amounts to drive up prices. For a while, it worked. Gold soared, banks panicked, and ordinary investors got crushed. Then the government dumped $4 million in gold, prices collapsed, and the schemers got smoked. Remember: if you break the golden rule, the government makes the rules on gold.