Is the Economy Weakening?
Are employment number revisions manipulation—or just part of the normal process? Will firing the person in charge of data collection jeopardize the reliability of economic reporting? Were the latest inflation numbers good or bad? Is bad news good, bad news bad, or good news good—and can we even trust the data? Is retail inflation more important than the Producer Price Index (PPI)? And how do these moving parts shape interest rates, inflation, and the broader economy? Oh, and let’s not forget—where does Artificial Intelligence fit in?
Data and Uncertainty
The data still points to an economy holding its own, despite ongoing policy changes and uncertainty. As we’ve noted in previous newsletters, it may simply be too early to know where things stand by year-end.
Uncertainty itself is a double-edged sword. In general, uncertainty is bad for markets, but in the realm of foreign policy (such as the ongoing Ukraine debates in Washington), it can be leveraged as a negotiating tactic. Markets, for now, seem to be adopting a “it could be worse” perspective.
Earnings, Tariffs, and Inflation
Second quarter earnings have held up, though tariffs are creating a squeeze. Some costs are being passed on to consumers, while in other cases importers are shouldering the burden. If tariffs weigh more heavily on importers going forward, that could mean both higher inflation and lower profits—a troubling combination.
Meanwhile, consumers continue to spend, and enthusiasm around Artificial Intelligence is driving investor interest. Pressure on the Fed to lower rates has ratcheted up, but the key question remains: have markets already priced in a September rate cut? If so, will markets sell off even if the Fed delivers what’s expected?
For more on this tug-of-war, see our recent post: Is the Market Tired, or Are We Just Burnt Out?
The AI Factor
The same names in technology—Nvidia, Meta, Microsoft, Amazon—continue to drive markets higher. But will AI become the next big bust, like the dot-com bubble or mortgage meltdown?
We don’t know yet. What we do know is that AI is already practical in everyday life. For example, I recently needed to gift a vehicle to my daughter in New Mexico. Using Google Workspace, Gemini (Google’s AI tool) provided step-by-step instructions on the documents required. Could I have found this with a traditional search? Probably—but Google routed me to Gemini.
Our recommendation: try an AI tool for yourself. The future is no longer tomorrow—it’s here now.
