Weekly Economic Report 5.30.25

It is raining money in the US economy, and in the early stages of what is likely to be another surge in inflation – everyone’s a winner! (Until they aren’t, but that is a 2026 story). By our estimates, personal income (which reflects $25 trillion of our $30 trillion economy) is running at a 6%+ annual rate in the second quarter. That is more than enough to generate above trend real GDP growth and a hefty 3-handle on inflation, after a 3.7% GDP deflator in the first quarter. The main culprit appears to be government largess – especially in entitlement programs – even before the new budget added higher deficits in 2026 and beyond. We are big believers that inflation is purely caused by too much money chasing too few goods – and it is clear that there is plenty of money, while tariff uncertainty is limiting new investment. That is a recipe for higher consumer prices (with CEOs blaming the tariffs) – but asset prices will go up first, as during Covid.

EU05-30-2025.pdf

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