A turbulent economic week for Trump, marked by new tariffs, alarming job losses, and a high-profile dismissal
The U.S. economy, despite showing resilience, is navigating through a period of caution as tariffs and trade negotiations loom large. Here's a snapshot of the key economic indicators and projections as of mid-2025:
Economic Growth
Real GDP grew at an annual rate of 3.0% in Q2 2025, rebounding from a 0.5% decline in Q1. This growth was primarily driven by a decrease in imports and an increase in consumer spending, though investment and exports weakened somewhat.
Labor Market and Consumer Confidence
The labor market remains robust with unemployment around 4.0%, supporting consumer spending despite some decline in confidence. However, rising initial unemployment claims and weak manufacturing new orders signal a softening in the business cycle.
Financial Markets
Equity markets have performed well, with the S&P 500 up 8.1% year-to-date. Strong earnings growth, driven by megacap tech and AI-related stocks, support economic strength despite inflation and geopolitical headwinds.
Leading Economic Index
The Conference Board’s Leading Economic Index (LEI) declined 0.3% in June 2025 and fell 2.8% over the first half of the year, indicating slowing momentum and signaling recession risk. However, no recession is currently forecast by The Conference Board, projecting 1.6% GDP growth for 2025.
Trade Dynamics
Exports dropped 4.0% month-over-month in June, reflecting ongoing trade tensions and tariff effects. Imports declined marginally, somewhat supporting GDP growth by lowering the import subtraction in GDP calculation.
The job market added only 73,000 jobs in July, far below expectations. The White House, however, hailed a more sustained increase in the labor force among native-born workers.
Trade negotiations between the U.S. and China have yielded neither a deal nor a formal extension of their trade truce. The Trump administration's imposition of higher import taxes on trading partners, including allies like Canada and Taiwan, has delivered a shock to global markets.
The U.S. government is receiving billions of dollars from tariffs, with monthly collections hitting a new record of over $29 billion. A deal with the European Union was announced that would set tariffs at 15%.
President Trump's aggressive trade policies have also extended to the pharmaceutical industry, with letters sent to more than a dozen companies demanding competitive pricing for new medicines.
The Federal Reserve announced it was keeping its benchmark interest rate unchanged, in part due to inflation concerns. Trump announced his intention to fire the head of the Bureau of Labor Statistics over perceived errors and manipulation of jobs data.
Despite these challenges, the U.S. economy is generally considered in good shape, albeit with mounting uncertainty and concerns about slowing growth. The White House spokesman stated that President Trump is implementing an America First economic agenda to deliver further prosperity and reduce wealth and income inequality.
[1] Trading Economics, U.S. GDP Growth Rate, https://tradingeconomics.com/united-states/gdp-growth-rate
[2] Bureau of Economic Analysis, Personal Consumption Expenditures Price Index, https://www.bea.gov/data/consumer-price-indexes
[3] Conference Board, Leading Economic Index (LEI) for the U.S., https://www.conference-board.org/data/business-cycleindicators/leadingeconomicindex
[4] U.S. Census Bureau, Advance Report (US), Exports and Imports of Goods and Services, https://www.census.gov/foreign-trade/press-release/advance/exports-and-imports-highlights.html
- Inflation concerns led the Federal Reserve to keep the benchmark interest rate unchanged, indicative of the ongoing economic uncertainties.
- The ongoing trade tensions and tariff effects have negatively impacted exports, causing a ripple effect on the economy.
- Despite a robust job market, the slowdown in the business cycle is evident in the rising initial unemployment claims and weak manufacturing new orders.
- The stock markets have shown resilience, with the S&P 500 up 8.1% year-to-date, supported by strong earnings growth, particularly in megacap tech and AI-related stocks.
- Real estate expenses, influenced by the economy, may become a concern for startups and individual investors as the growth slows and political uncertainties persist.
- Unbuffered by recession forecasts, the Trump administration maintains its focus on trade negotiations and tax-related policies, aiming to address the perceived wealth and income inequality, a central component of their America First economic agenda.
