"Strong" Q2 GDP Growth Not Actually As Robust As It Sounds? | New Harbor Financial

Jul 31, 2025

In this discussion, John Llodra and Mike Preston, lead partners at New Harbor Financial, unravel the intricacies behind the recently reported 3.0% GDP growth. They highlight that this number, while seemingly strong, masks deeper economic challenges related to inventory changes. Conversations touch on the Federal Reserve's upcoming policies, market speculation, and the implications of geopolitical trade agreements. Additionally, they dive into investment risks in precious metals and Bitcoin, stressing the importance of cautious strategies in today's volatile market.

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INSIGHT

Q2 GDP Growth Is Misleading

The Q2 2025 GDP number of 3.0% growth is distorted by massive shifts in imports due to tariff-related inventory adjustments.
The headline GDP growth overstates economic strength; underlying investment fell and many sectors remained stable.

INSIGHT

Fed Likely Holds Rates Steady

The market expects the Federal Reserve to maintain current interest rates, with no cuts likely soon.
Economic data doesn't justify rate cuts, and calls for rapid cuts would risk market chaos.

INSIGHT

Trade Deals Reduce Uncertainty

Recent trade deals with Japan, the EU, UK, and India reduce global trade uncertainty, removing fears of isolation.
These deals put the US in a stronger position and increase pressure on China to negotiate.

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The initial Q2 2025 GDP growth number was just released and it beat expectations handily, coming in at a "strong" 3.0%But...when looking just a little bit beneath the surface, the data doesn't look as impressive as on first glance. For example, the biggest contributor by far to the "beat" was shrinking inventories relative to the massive Q1 pre-orders that were made as corporations front-ran the Trump tariffs.So, just as the negative Q1 GDP number wasn't truly as bad as it seemed, similarly the Q2 number isn't as robust as the headline suggests.The team from New Harbor Financial and I dig into what the true reality likely is, as well as discuss the latest FOMC release, the tremendous amount of speculation in the markets today, and the latest price action in gold, silver and Bitcoin.

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