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“We should use some of these dangerous cities as training grounds for our military, National Guard, but military,” Trump told an audience filled with top generals and admirals in Quantico, Virginia. He told the commanders that defending the homeland was the military’s “most important priority” and suggested the leaders in attendance could be tasked with assisting federal law enforcement interventions against an “invasion from within” Democratic-led cities, such as Chicago and New York City. The White House has already directed the deployment of National Guard troops across Washington, D.C., after declaring a public safety emergency. On Tuesday, he suggested that Afghanistan — where more than 2,400 American troops and hundreds of Afghan troops and civilians were killed in a brutal, two-decades-long war — was safer than the U.S. capital prior to the federal government’s intervention in August.

“Washington, D.C., was the most unsafe, most dangerous city in the United States of America, and to a large extent beyond, and beyond that. You go to Afghanistan, they didn’t have anything like that,” Trump told the military leaders. The remarks came one day after the president and First Lady Melania Trump hosted a reception for 50 Gold Star families at the White House. The gathering included military families who lost loved ones in Afghanistan. According to FBI data, Cleveland, St. Louis and Memphis, Tennessee, are plagued with the highest total crime rates — not Washington. Crime has been down across the board in D.C., with 20-year homicide trends at their lowest point since the 2020 pandemic, according to the Washington, D.C., Metropolitan Police Department. The nation’s capital has sued the Trump administration for deploying the National Guard within the city’s boundaries, with the D.C. attorney general’s office alleging that the administration’s efforts are an “involuntary military occupation.”

National Guard troops are deploying this week to Portland, Oregon, and Memphis as part of the administration’s effort to quell crime and unrest in those cities. Democratic leaders in Oregon have challenged the Oregon Guard’s deployment orders in court, filing a suit against Trump, Hegseth and Homeland Security Secretary Kristi Noem on Sunday that accuses the administration of exceeding its executive powers and basing its actions on a “wildly hyperbolic pretext.” “The President says Portland is a ‘War ravaged’ city ‘under siege’ from ‘domestic terrorists.’ Defendants have thus infringed on Oregon’s sovereign power to manage its own law enforcement activity and National Guard resource,” Oregon officials said in the lawsuit. According to CNN, Portland Police Bureau logs show more than 100 calls made to the address of the city’s Immigrations and Customs Enforcement building this year for reasons including “disorder,” “unwanted person” and shots fired. One riot was reported outside the ICE building, when the national “No Kings” rally in June turned violent in the area, prompting three arrests.

Some current and former defense officials have raised concerns to Military Times that the deployments appear authoritarian and threaten to drive a wedge between the military and American citizens. “It will no longer be that our military is part of us. It’ll be, ‘It’s those guys in uniform, those armed thugs,’” Retired Maj. Gen. Randy Manner, who served as vice chief of the National Guard Bureau, told Military Times earlier this month.

Crime has continued to decline since more than 2,200 Guard members deployed to Washington. The Guard members have also focused on “beautification” efforts that have spruced up public park areas that officials say have been neglected amid National Park Service manpower shortages following cuts, buyouts and contract freezes initiated earlier this year by the Department of Government Efficiency. Guard members have “cleared 1,133 bags of refuse, spread 1,045 cubic yards of mulch, removed five truckloads of plant waste, cleared 7.9 miles of roadway, painted 270 feet of fencing, 400 trees pruned, and packaged 6,030 pounds of food,” according to the latest data provided Monday by the joint task force in charge of the D.C. deployment.

lol. look at all the great work our troops are doing! (that was supposed to be done by actual, like, employees, but we fired them, so...)

Some folks have gotten a bit carried away with the revisions that put the second quarter growth rate at 3.8 percent. That does look impressive in isolation, but it is important to remember the economy shrank at a 0.6 percent rate in the first quarter.

That puts the average at 1.6 percent for the first half of the year. That’s not terrible but it is hardly cause for celebration. Remember, the economy grew 2.4 percent last year and the vast majority of forecasters expected growth at this rate to continue.

And we really do need to look at the two quarters together. Just as unusual factors were responsible for the fall in GDP we saw in the first quarter, they are also responsible for the strong growth reported for the second quarter.

To take the most notable example, the lower trade deficit added 4.83 percentage points (PP) to growth in the second quarter. A pre-tariff surge in the trade deficit subtracted 4.63 PP from growth in the first quarter. Only a devoted Trumper would focus on the second quarter number without mentioning the first quarter jump in the trade deficit.

Moving beyond the irregular numbers, we get that non-residential fixed investment added 0.98 PP to growth in the second quarter after adding 1.24 PP in the first quarter. The first quarter growth was partly due to pre-tariff stockpiling but the second quarter growth on top of this indicates we are looking at something sort of real. This is the AI boom. If that turns into a bust, we will see this growth quickly reversed.

Consumption accounts for the bulk of GDP and here the story is pretty blah. The second quarter’s growth rate was a healthy 2.5 percent, accounting for 1.68 PP of the quarter’s growth. But this followed a growth rate of just 0.6 percent in the first quarter, leaving an average of rate of 1.6 percent for the first half. That’s not horrible, but certainly not great.

We also have seen evidence that the growth in consumption has been concentrated among higher income people who are spending their stock gains. That is consistent with my simple measure of looking at real spending at fast food restaurants. I consider this useful since it’s unlikely that rich people increase their consumption of fast food because their stock portfolio is worth more.

And spending on fast food has to rank as largely a discretionary purchase. It is one thing that is relatively easy to cut back on if a family has to tighten its belts. Real spending at fast food restaurants was just 0.3 percent higher in the second quarter than the average for 2024. That doesn’t look like most people are feeling good about the economy.

Tomorrow, we will get new data on consumption for August, along with revisions for prior months’ data. Maybe that will show a different story, but for now, it looks like we have a weak economy that is being sustained by the AI boom. That boom could go on for a while and keep the economy moving forward, but it may not.