$BTC The U.S. economy just dropped two MAJOR bombs with the Q2 2025 GDP and inflation data—and they’re not what they seem.
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📉 Bomb #1: Strong GDP Growth… But It’s a Mirage
Real GDP surged 3.0% annualized in Q2 2025, rebounding sharply from the −0.5% contraction in Q1—well above forecasts of ~2.4–2.5%
However, a nearly 30% plunge in imports—after businesses front-loaded shipments ahead of tariff hikes—artificially boosted GDP, contributing about +5‑ppts, while inventory drawdowns subtracted ~3.2 ppts
When stripped of these volatile trade and inventory effects, core domestic demand growth was a sluggish ~1.2%, the weakest since 2022
🔥 Bomb #2: Inflation Is Easing—not Cratering
Core PCE— the Fed’s preferred inflation gauge—came in at ~2.5% QoQ (roughly 2.4–2.7% year-over-year), down from ~3.5% in Q1, signaling cooling—but not rapid disinflation
While price pressures are easing, inflation remains above the Fed’s 2% target. Combined with soft demand, many economists argue interest rates may stay elevated for longer