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<\/p>\n Email Link<\/p>\n \n If news about inflation, trade, the Federal Reserve and jobs has you confused and you\u2019re not sure what to make of the US economy, don\u2019t worry: You\u2019re in good company.\n <\/p>\n \n But this week offered a ton of information<\/a> that provided a more focused \u2014 if not exactly crystal clear \u2014 picture of what\u2019s happening with America\u2019s economy.\n <\/p>\n \n We got reports on inflation, gross domestic product, jobs and consumer sentiment, a Fed rate decision and a flurry of trade announcements, all of which removed varying degrees of uncertainty about where the economy has been heading.\n <\/p>\n \n If you\u2019re just looking for the tl;dr, here are the big takeaways from this week:\n <\/p>\n America\u2019s economy is still robust but weakening.<\/p>\n<\/li>\n Consumers are still willing to spend their money, but they\u2019re growing more cautious.<\/p>\n<\/li>\n Tariffs came in lower than President Donald Trump\u2019s most aggressive threats, but they\u2019re slowly adding to inflation as some prices creep higher again.<\/p>\n<\/li>\n Trump\u2019s trade agreements may open up some foreign markets to US goods, but Americans are now paying higher taxes on imported goods today than they were yesterday.<\/p>\n<\/li>\n The reliable job market is become less of a sure bet, and employers may be more resistant to hiring than we previously believed.<\/p>\n<\/li>\n And you might not have to linger too long for that long-awaited interest-rate cut.<\/p>\n<\/li>\n<\/ul>\n \n If you crave context and don\u2019t mind a slightly unabridged rundown, here you go:\n <\/p>\n \n Trump\u2019s historic trade agenda was expected to turn the economy on its head. That hasn\u2019t happened \u2014 at least, not yet.\n <\/p>\n \n The lack of a sudden recession, as many feared, has given investors confidence that they can safely ignore trade \u2014 and stocks have risen to all-time highs in recent weeks. It has also given Trump confidence that he can raise tariffs dramatically, as he just did on Friday. Even with a flurry of 11th-hour trade agreements, America\u2019s effective tax rate on imported goods has shot above 18%. It stood at just 1.2% last year. That could add $2,400 in costs<\/a> for the average American household, according to Yale\u2019s Budget Lab.\n <\/p>\n \n The economy has remained surprisingly strong this year, which perhaps shouldn\u2019t have come as such a shock: America is the world\u2019s largest and most complex economy, with a multitude of natural resources.\n <\/p>\n \n However, economists warn that tariff effects are just starting to become apparent, and they could escalate in the second half of 2025.\n <\/p>\n \n Tariffs left a bigger mark on goods prices in June, which in turn put upward pressure on overall inflation<\/a>. The Personal Consumption Expenditures price index, a mouthful best known as the Fed\u2019s favored inflation gauge, showed that prices rose 0.3% in June from May, boosting the annual rate of inflation to 2.6% from 2.4%.\n <\/p>\n \n That 2.6% is the highest rate in four months and marks a step in the wrong direction from what the Fed wants to see, which is inflation at 2%. And that 0.3% monthly hike, if continued, would drive that annual rate well north of 3%.\n <\/p>\n \n The PCE price index painted a similar picture to the June Consumer Price Index and Producer Price Index: More businesses were seeing higher costs because of tariffs and passing some of those on to consumers.\n <\/p>\n \n And while the expansive and expensive tariffs aren\u2019t expected to trigger an inflationary surge like we saw in 2022, annual inflation is expected to bounce back above 3%. But as we learned and felt coming down from that recent inflation high, when price levels rise for a broad suite of commonly purchased items, it takes a big bite out of Americans\u2019 hard-earned pay.\n <\/p>\n \n Economists expected that job growth would slow in July. After all, uncertainty has stifled businesses\u2019 hiring plans for several months running now. Plus, job gains are becoming increasingly concentrated in a select few industries: health care, education and (especially during the summer) leisure and hospitality businesses.\n <\/p>\n \n But hiring was significantly slower in July<\/a> than expected. And May and June were also revised down sharply, suggesting that the job market may be considerably worse than we had previously expected.\n <\/p>\n \n Through July, the US has added an average of just 85,000 jobs per month. That\u2019s pretty weak and slightly below the breakeven employment level, in which the jobs added are enough to keep up with labor force growth and hold the unemployment rate steady.\n <\/p>\n \n Outside of the pandemic recession in 2020, that current pace is the weakest January-to-July average since 2010, when the US economy was licking its wounds from the Great Recession.\n <\/p>\n \n Some tariff-sensitive goods<\/a> \u2014 think: washers, dryers, furniture, clothes, shoes, toys, sporting goods and curtains (window and floor covering prices surged by a record 4.2% in June<\/a>) \u2014 are on the rise, but consumers are generally holding up okay.\n <\/p>\n \n A slice of the population has benefited from stock market gains, as potential tariff rates come into better focus and boost investors\u2019 confidence. The broader populace is still seeing pay gains outpace inflation (although to a lesser extent than recent years).\n <\/p>\n
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