Trump claims the economy, for better or worse

• But the administration is claiming ownership of the U.S. economy at a precarious moment nonetheless.
• There are signs that the economy is weakening, even as President Trump continues to ramp up his trade war.

What they're saying: "[T]he Trump Economy has officially arrived," Commerce Secretary Howard Lutnick posted on X Wednesday after a GDP report that showed a healthy 3% growth rate.

• "Biden's first quarter is behind us, and growth is already accelerating," Lutnick said. "President Trump's tariff policies have drawn historic investments and opened up global markets for U.S. businesses."
• He'd previously suggested the Trump era would not kick in until later in the year.

Reality check: White House policy has been the main driver of this year's two GDP reports, with trade-related effects distorting both of the readings.

• Businesses rushed to import goods from overseas to get ahead of tariffs, activity that depressed headline GDP in the first quarter. (Imports are a subtraction in GDP calculations.)
• But the second-quarter reversal boosted headline GDP by nearly 5 percentage points, the biggest contribution from the category on record.

The intrigue: Tariffs — and the uncertainty around them — have dominated forecasts since the start of the year, a sign of how Trump has shaped the economic outlook.

• "Would the economy have grown at a faster pace this year without the tariffs? I think we would probably have had a very boring year of trend-like growth without these policy changes," Goldman Sachs economist David Mericle tells Axios.
• Mericle says if the baseline tariff rate is ultimately around 15%, growth will slow this year, though the bank puts odds of a recession below 50%.

Friction point: The economy is flashing warning signs.

• The GDP report showed that a measure of underlying private sector demand rose at only a 1.2% rate last quarter, the weakest since the end of 2022.

• That is a slowdown from the 1.9% rate in the first quarter. Then, White House officials pointed to this indicator as a sign the economy was not as weak as the negative headline suggested.

Of note: Federal Reserve chair Jerome Powell, under pressure from Trump to cut interest rates, said tariffs have stoked price increases, though it is too soon to tell whether that will persist.

• "Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen," Powell told reporters yesterday.
• The Fed held rates steady, though that decision was contentious: Two top officials, both Trump appointees, preferred to cut rates — the first time two governors dissented in more than 30 years.

The bottom line: It is easy to own the economy when the headlines are good.

• It leaves little wiggle room if the economic data turns south, as many mainstream economists still expect will be the case later this year.