• July inflation numbers as measured by the Private Consumption Expenditures (PCE) index remained stubbornly excessive. The PCE worth index is a key measure watched by the Fed when it considers rates of interest.

• The inventory market hit excessive document highs through the week — however hit some turbulence on Friday after the PCE numbers have been launched.  

• Gross home product (GDP) was sturdy in Q2 after a decline in Q1 (extra on that under).

• A coverage change is disrupting the booming enterprise in direct-order imports. Learn on.

In case you prefer to hunt for on-line bargains, it is likely to be time to brush up in your Latin.

At this time (that’s Friday, Aug. 29) marks the top of the de minimis exemption*, a coverage that allowed small business packages under a set greenback quantity to be mailed into the US with out paying customs duties or charges.

The coverage has been round since 1938 (when the bar was set at $1) and was a comparatively small a part of the economic system — till 2016, when the $200 restrict that had been in place for the reason that Nineties was raised to $800. That helped spark the rise of e-commerce platforms like Shein and Temu, which specialised in direct-order imports of cheap quick vogue, toys and electronics from China.

Add one pandemic to the combination and we noticed an explosion of small-package imports into the U.S., rising from 220 million de minimis packages in 2016 to 1.36 billion in 2024, ultimately hitting a charge of 4 million packages a day. Right here’s a have a look at the greenback worth of de minimis imports into the US since 2012.

The de minimis exemption for China and Hong Kong ended Could 2 — forcing corporations that constructed their enterprise fashions across the exemption to shortly adapt. Temu formally ended direct shipments to the U.S. in Could, for example, and together with Shein is constructing warehouses within the U.S. Meaning the businesses are actually bulk-shipping to warehouses, paying relevant tariffs upfront and, presumably, passing a minimum of a few of that value alongside to shoppers.

“At their peak, these two platforms were shipping about 600,000 packages per day to U.S. customers,” stated Sean Henry, CEO and co-founder of Stord, an Atlanta-based provide chain specialist, in an e mail interview. “When average delivery times jumped from 7-10 days to 14-21 days due to customs bottlenecks, and customers started to experience ‘sticker shock’ from new duty charges, they had no choice but to adapt.”

Stord operates warehouses within the U.S. and manages order success for a wide range of on-line retailers.

Now that the exemption has ended for all incoming packages, adjustments are rippling to all corners of the e-commerce ecosystem. “Beyond the Chinese platforms, many companies have historically leveraged de minimis — dropshippers, marketplace sellers on Amazon and Etsy, fast-fashion exporters, and even U.S. brands that manufacture abroad and ship direct-to-consumer from overseas warehouses,” Henry stated.

All of them are shortly adjusting their enterprise fashions in response to the coverage change, in keeping with Henry: “​​Overall, companies that built their entire model on cheap international shipping are having to pivot to focus on quality, customer service, and other differentiators beyond just price.”

What does all this imply for buyers? “In the short term, shoppers should expect significant changes,” Henry stated.

“A $10 item with free shipping from overseas will now come with import duties and customs fees that might double the price. Look for new line items like ‘import duties’ or ‘customs fees’ at checkout. We’re already seeing 40% of online shoppers abandon their carts when faced with these extra charges. Delivery times are also stretching from days to weeks. Express carriers like DHL, UPS, and FedEx are still operating, but what used to be $10 shipping might now be $30-$50.”

In the long term, “shoppers should expect fewer ultra-cheap options,” Henry stated. “The old system created artificial price competition that often came at the expense of quality and worker conditions.”

So, is the direct-import mannequin over, after its temporary heyday?

“The individual parcel direct import model is essentially dead, yes,” Henry stated. “We’re projecting a 75% collapse in small-parcel volume, from 800-900 million packages annually down to 200-300 million. The era of easily shipping a $5 phone case directly from China to your doorstep is over.”

However hey, it was enjoyable whereas it lasted. And one thing new is rising instead. “Cross-border e-commerce isn’t dead,” Henry stated. “It’s being rebuilt from the ground up.”

Again in April, when the primary quarter financial development report got here out, the image was grim: Gross home product (GDP) for January via March confirmed a 0.5% decline — the primary financial contraction since early 2022.

Doomer predictions adopted as recession fears spiked. In any case, two straight quarters of shrinking GDP is how economists outline a recession. However by July 30, second-quarter information was launched and the outlook brightened: GDP rose 3%. And on Thursday, the second GDP estimate confirmed GDP grew 3.3% — a 0.3 proportion level upward revision from the primary estimate.

However the topline figures don’t inform the entire story. The primary quarter contraction was primarily as a result of a spike in imports (which subtract from GDP) and weak enterprise funding. In Q2, enterprise imports dropped, whereas shoppers spent closely on well being care, eating, journey and automobiles. Each behavioral shifts have been influenced by the looming risk of tariffs.

Throughout the first half of the yr, the complete breadth of President Donald Trump’s tariffs weren’t but in place. That implies that development information for the primary half of the yr might understate the consequences of the insurance policies. The third quarter GDP report might present a clearer image of how the tariffs are influencing financial development.

The animated hit marked some milestones, changing into the most-streamed film ever on Netflix and dominating the weekend field workplace with a two-day-only run of a sing-along model. The film additionally dominated the digital watercooler speak at NerdWallet this week. A completely unscientific ballot discovered that for 62% of NerdWallet dad and mom who responded, “KPop Demon Hunters” is now positively a “thing” of their households.

And for many who stated sure, it’s a factor, what number of instances has it been watched?

Right here’s what our senior economist, Elizabeth Renter, will probably be monitoring subsequent week:

Friday, Sept. 4:
Employment State of affairs (“jobs report”), Bureau of Labor Statistics — After final month’s (July information) revisions (and subsequent BLS shakeup), all eyes will probably be on this report. I’ll be paying shut consideration not solely to the topline complete employment change, however the diffusion index — a determine that tells us whether or not there are extra industries including or shedding jobs in a given interval.

Try Elizabeth’s full weekly look-ahead right here.