US consumer spending is slowing: The personal consumption component of GDP rose at an annualized pace of +1.4% in Q2 2025, slightly below expectations for a 1.5% increase. This is up from +0.5% seen in Q1, but also marks the slowest 2-quarter stretch of consumption growth since the 2020 pandemic. Overall, the US economy grew 3.0% last quarter, but much of that was driven by a sharp drop in imports. Meanwhile, real final sales to private domestic purchasers, a key gauge of underlying demand closely watched by the Fed, increased +1.2%, the least since Q4 2022. To put this differently, the economy is running just above 1% growth net of trade distortions. Despite a roaring stock market, consumers are pulling back.(The Kobeissi Letter)