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Who would have thought it? The eurozone, derided by Donald Trump as a declining economy that was heading in the wrong direction, outpaced the US economy in the June quarter.<\/p>\n
The eurozone economy grew at an annualised rate of 1.8 per cent that quarter, while the US economy grew at 1.5 per cent. Canada, hit hard by Trump\u2019s tariffs, grew its economy over the quarter at an annualised rate of 3.4 per cent.<\/p>\n
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US President Donald Trump, along with his Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, have repeatedly promised a \u201cGolden Age\u201d would arrive this year for the US economy.AP<\/p>\n
Europe\u2019s growth rate was its fastest in more than a year, despite continuing energy shocks emanating from Trump\u2019s war in the Middle East and his tariffs.<\/p>\n
In the United States, growth slowed from 2.1 per cent rate in the first three months of the year, despite the continuing boom in artificial intelligence-related investment, lower oil and petrol prices during the ceasefire in the war on Iran and a surge in spending by wealthier Americans (with some assistance from the World Cup) in June.<\/p>\n
So much for an economic \u201cGolden Age\u201d for the US that Trump, his Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick have repeatedly promised would arrive this year.<\/p>\n
So far, the only gold is to be found in the White House, or on Washington\u2019s monuments, where Trump has been gilding anything and everything he can, or in the wealth being accumulated by the Trump family and their associates.<\/p>\n
Related Article The US economy would probably be running a lot hotter if not for the war in the Middle East<\/a> and the global war on trade<\/a> that Trump keeps trying to establish a legal basis for.<\/p>\n Along with the data on GDP that was published late last week, the Commerce Department put out personal consumption expenditures (PCE) data for June that showed the US Federal Reserve Board\u2019s preferred measure of inflation, the PCE index, fell 0.1 per cent in June to be 3.7 per cent higher than it was in the same month last year.<\/p>\n While that\u2019s well below the 4.1 per cent May-on-May rate, it is still way above the Fed\u2019s inflation target of 2 per cent. Even stripped of energy and food prices, \u201ccore\u201d PCE inflation was 3.3 per cent.<\/p>\n In July, hostilities in the Middle East resumed, and oil prices, which had fallen back below $US72 ($102) a barrel in June, spiked again after the brief ceasefire. They surpassed $US100 a barrel last month, before again falling, to about $US84 a barrel at present, as talks appear to have resumed.<\/p>\n US petrol and diesel prices remain well above their prewar levels \u2013 petrol about $US1 a gallon higher and diesel about $US1.60 a gallon higher \u2013 and will continue to feed into the inflation rate.<\/p>\n It is inflation, a declining savings rate, and the fact that much of the equipment required for the boom in AI is imported (and therefore subtracts from GDP) that are weighing on US growth.<\/p>\n For various reasons \u2013 not least the stop-start ways in which the trade war, and the real war, have been waged \u2013 their impact on the inflation rate and economic growth hasn\u2019t been as significant as most outside the administration had expected.<\/p>\n With another newly imposed round of global tariffs on 99.4 per cent of America\u2019s imports, and the war in the Middle East dragging on without any obvious clean conclusion, their effects on the economy and the inflation rate might have been stretched out and delayed, rather than avoided.<\/p>\n Related Article Rather than a one-off shock before prices stabilised, they might still be bleeding into prices and the economy in a fashion that means they may not be \u201ctransitory\u201d and therefore can\u2019t be dismissed as such by the Fed, which left its policy rate unchanged \u2013 for the fifth successive time \u2013 after last week\u2019s meeting.<\/p>\n With the Fed\u2019s new Trump-appointed chairman, Kevin Warsh, creating an information vacuum by withdrawing any guidance on interest rates, the bond market has taken matters into its own hands<\/a>.<\/p>\n The 10-year bond yield is now 4.74 per cent, compared with its pre-meeting level of 4.61 per cent. The 30-year yield has jumped 18 basis points to a 19-year high of 5.27 per cent.<\/p>\n Those yields, if sustained, will choke spending and investment and raise the borrowing and refinancing costs on the US government\u2019s debt, which is rapidly nearing $US40 trillion ($57 trillion).<\/p>\n So far, the only gold is to be found in the White House, or on Washington\u2019s monuments, where Trump has been gilding anything and everything he can, or in the wealth being accumulated by the Trump family and their associates.<\/p>\n Eurozone data shows that its economies \u2013 despite being battered by energy-related shocks that began with the war in Ukraine and are continuing with the war in the Middle East, and having to deal with a tide of cheap Chinese imports that has swelled since Trump started building his tariff wall around the US market \u2013 are more resilient than expected.<\/p>\n All the major economies \u2013 Germany, France, Italy and Spain \u2013 grew solidly, if not spectacularly, in the quarter, and Ireland, a beneficiary of the AI boom, bounced back from a sharp contraction in the first quarter to growth of 3.9 per cent in the second.<\/p>\n Like most of the rest of the world (China and Canada being the exceptions), while it did threaten action, the eurozone didn\u2019t respond to the US tariffs with retaliatory tariffs \u2013 taxes on its consumers \u2013 of its own.<\/p>\n It\u2019s the US, thanks to the tariffs and the impact of the war-driven higher oil prices on domestic petrol and diesel prices, that is hitting its own businesses and consumers and its own growth hardest.<\/p>\n A 1.5 per cent growth rate isn\u2019t a disaster, but it\u2019s hardly the \u201cGolden Age\u201d. The 5 or 6 per cent growth rates that Trump said his policies could generate haven\u2019t materialised (which is no surprise), and neither have the trillions of dollars of foreign investment in the US manufacturing sector that he also said would flow.<\/p>\n Real wages for US workers are declining, manufacturing sector jobs have shrunk, and it is the AI boom and those wealthiest households who benefited most from the tax cuts in Trump\u2019s One Big Beautiful Bill Act and who have gained most from the AI-driven sharemarket wealth effects that are generating the reasonably solid but unspectacular economic growth rate.<\/p>\n If something were to disrupt the AI boom \u2013 and investors are getting nervous about the sustainability of the vast amounts of capital being poured into it, by increasingly negative cashflow-generating companies, relative to the cheaper Chinese alternatives and the returns in prospect \u2013 the implications for the sharemarket and economy would be threatening.<\/p>\n Related Article Trump and those in his team regularly denigrate the Europeans and their economies, saying the economies are over-regulated, stagnating or declining, being swamped by illegal migrants and effectively subsidised by the US (or leeching off it via unfair terms of trade).<\/p>\n Some of those criticisms might be valid, but the Trump alternative of aggressive deregulation, trade barriers and extortion, draconian crackdowns on undocumented migrants and immigration more broadly and a war in the Middle East that is delivering nothing but humiliation and higher energy costs make it difficult for the administration to claim the US, or at least this particular administration, has the superior economic or governance model.<\/p>\n The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n![\"Donald](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/08\/947eeedeed0ab8b5949c76be2be1290e08996a08.jpeg\")
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The US economy would probably be running a lot hotter, if not for the war in the Middle East and the global war on trade that Trump keeps trying to find a legal basis for.Bloomberg<\/p>\n![\"No](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/08\/20dd8044dea234b7c9afc2b43edd969c32df8381.jpeg\")
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The Trump family and their associates are accumulating vast amounts of wealth during Donald\u2019s second term.AP<\/p>\n![\"President](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/08\/702c07e3eb00c9c58c3715ff99579ae0e94aa18a.jpeg\")
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