Trump’s merely “okay” economy

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The American economy lost some steam this spring as the war in Iran pushed up energy prices. But don’t let that slower growth, or the downer vibes, fool you: The economy is actually…doing all right.

The latest report out Thursday from the US Bureau of Economic Analysis, which covers the months of April, May, and June, finds that consumers and businesses have been feeling surprisingly spendy, despite the drag of inflation.

Inflation does remain well above the Federal Reserve’s annual target of 2 percent. And a surge in imports — largely semiconductors and other gear related to the AI boom — pulled the economy down on paper. Overall, the US gross domestic product expanded at an annual rate of 1.5 percent, slower than economists expected.

But imports and exports can swing dramatically from quarter to quarter, and cleaner measures of underlying demand (like the dreadfully named “real final sales to private domestic purchasers,” which filters out some of the noise of quarter-to-quarter swings) showed stronger growth. “It’s an economy that’s doing okay,” summed one economist to the Washington Post.

The US economy is surviving Trump

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This raises an obvious question that President Donald Trump somehow has not posted about yet: If the economy is chugging along, does he deserve the credit?

After all, in addition to these GDP numbers, unemployment is pretty low. And wages rose faster than inflation last year, helping offset higher prices.

But many economists argue that the economy has held up despite Trump’s policies, not because of them. Without Trump’s meddling, today’s “okay” economy might have been fantastic.

Let’s take a closer look at inflation to see how this shakes out. Trump has famously imposed massive and ever-changing tariffs on virtually all of America’s trading partners — including, most recently, a 50 percent levy on many goods from Canada. If I run a liquor store and want to stock Canada’s iconic Crown Royal, each $25 bottle now costs me $37. I either eat that cost, drop the product…or pass some of the increase on to customers.

Repeated across the economy, these little pass-throughs add up. The Dallas Federal Reserve calculated that, as of March, America’s core inflation rate would have been just 2.3 percent — instead of 3.2 percent — without Trump’s tariffs. Put another way, Yale’s Budget Lab estimates that tariffs cost the average US household $1,100 a year.

So maybe the economy is doing okay…but it could also be better. Personally I’d like an extra $1,100. And a Canadian whisky, for that matter. 

One link for later

➨ Don’t rent the new iPhone. Apple rolled out a new “upgrade” program a few days ago, partnering with Klarna to offer customers the ability to rent smartphones for $35 a month. The scheme may make sense for diehards who always want the latest phone and switch devices frequently. But for most other people, it’s not worth it. “How do I know people aren’t getting a good deal here?” one law professor said. “If they were, Apple wouldn’t be offering it.”

Before you go…

• Did you know…that stroke patients can sometimes relearn speech by singing their sentences first? The treatment is called melodic intonation therapy, and it grew out of research into how the brain processes music and language.
• Today’s trivia: What kind of fruit is an ugli? (You can find this and other brain puzzles in Vox’s daily crossword. Look for the answer in tomorrow’s edition.)
• Yesterday’s trivia: Yesterday we asked you for the name of Hercules’s stepmother. That would be Hera, who in Greek mythology — and contrary to her Disney movie portrayal — absolutely hated Hercules and repeatedly tried to kill him.