Friday’s GDP print came up short of estimates, falling 0.1% versus expectations for a gain of similar magnitude - the third straight sequential decline…

… resulting in a 0.4% quarterly drawdown that was anchored almost entirely by a slowdown in exports - as the first full quarter of tariff impacts hit overall trade activity and front-running in Q1 made for a tough comp.

At the industry level, manufacturing was the primary laggard…

… as tariffs magnified the longer-term structural challenges facing the industry - with activity down nearly 10% from 2022 highs.

Despite the weak GDP print, final domestic demand recovered in Q2 - rising 0.9%…

… on the back of a 1.1% gain in per capita consumption…

… which offset a small decrease in fixed capital formation - as general business uncertainty slows down investment decision making.

Whether that dynamic can last remains to be seen, as Q2’s growth in consumption outstripped growth in disposable income - eating into household savings.

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