Tariffs put the squeeze of companies and consumers while collecting billions of dollars for the United States government. A labor market that shows important signs of cracks even when the unemployment rate remains moderate. Technological stocks arise on Wall Street, fueled by the rise of artificial intelligence, since many other sectors are sick.
As said Secretary of Commerce Howard Lutnick on social networks earlier this week: “Trump’s economy has officially arrived.”
Last week I was already prepared to be a disaster for the data, and investors and analysts anticipated with enthusiasm updates on economic growth, jobs and the last interest rate of Fed. The main companies such as Apple, Amazon, Meta and Microsoft reported their latest financial results. Trump’s deadline for trade agreements was established for Friday.
But what happened this week turned out to be more extraordinary than anyone expected.
“I am sending red flares: we are in the precipice of a recession,” said Mark Zandi, chief economist of Moody’s Analytics, a financial research company. “If tariffs continue to increase, I don’t know how we avoid a recession.”
Upon arriving this week, the American economy had generally been considered in good shape despite the growing uncertainty and concerns about the deceleration of growth.
The week began in Scotland with the announcement of an agreement with the European Union that would establish 15%tariffs, ending months of uncertainty about the largest commercial partner of the United States.
Commercial conversations moved to Sweden, where the main officials of the United States and China had two days of negotiations. The conversations did not produce an agreement or a formal extension of the commercial truce of the two countries, which will expire on August 12.
“The meetings were very constructive,” said Treasury Secretary Scott Besunt, journalists after the conversations ended. “It’s just that we haven’t given the firm.”
Given the importance of commercial relations between the two largest economies in the world, the Cliffhanger meant the cloud of uncertainty created by Trump’s rates persisted, despite the fact that some agreements have taken other important commercial partners, including the European Union and Japan.
On Tuesday he offered few reasons for renewed optimism, with the international shipping giant that decreases again to issue financial forecasts for the rest of the year, which caused investors’ concern about the impact of Trump’s changing commercial war and causes the company’s actions to be tanks.
On Wednesday, it began with the Commerce Department that reports figures for the gross domestic product of the second quarter, or GDP, which measures economic growth in the US. UU. The data showed an annual gain of 3%, exceeding expectations. But the same report also contained worrying signs about business investment, even when prices growth accelerated.
Later that day, the Federal Reserve announced that it maintained its reference interest rate without changes, in part due to those inflation concerns. That caused Trump’s anger, who has spent weeks harassing the president of the Fed, Jerome Powell, to reduce the key loan rate. In the comments after the announcement of the Central Bank, Powell pointed out the continuous concerns about the potential of Trump’s tariffs to increase the prices of US consumers, but critically, referred to the labor market as “solid.” In particular, two members of the Rate Fixing Board, both appointed by Trump, disagreed, the first time it has occurred in more than three decades.
Microsoft’s Blowout and Facebook Matriz Meta, two companies in the center of the AI investment boom, which is a key part of Trump’s national agenda, helped the stock market to reach new maximums on early Thursday. Microsoft briefly became the second company to be worth more than $ 4 billion in the stock market.
However, by the time the markets closed that day, the actions had erased their profits after Trump sent letters to more than a dozen pharmaceutical companies that demand that they offer customers more competitive prices for new medications and give them 60 days to meet.
On Thursday night, Trump announced a new set of rates that unilaterally imposed major import taxes on a large number of commercial partners, including allies such as Canada and Taiwan. The new effective rate of more than 15% delivered a shock to global markets. The month closed with the Treasury Department that reported that the monthly rates collections had reached another new record of more than $ 29 billion.
In an interview with NBC News that night, Trump promoted the new expansive tariffs, saying that he believed that everything was “very good, very soft”, even when he remained open to new agreements.
Then the Friday works report arrived.
At 8:30 am, the Office of Labor Statistics published reviews that show a total of lower jobs for May and June of what was initially reported, while discovering that the economy had added only 73,000 jobs in July, well below expectations. In total, he suggested that the United States has won an average of only 35,000 jobs per month in the last three months, and excluding the increases observed in the health care industry, the United States had lost more jobs than it had created.
However, the unemployment rate remained at 4.2%, a sign that general unemployment remains moderate. However, many economists pointed out that the data point is largely attributable to the repression of immigration of the president, which is reducing the general labor force.
The White House praised the loss of workers born abroad, since it also pointed out a more sustained increase in the workforce among native workers.
“If we are changing to employment holders born abroad by job holders born in the United States, I think it’s a victory,” he told Axios, Chief Economic Advisor of the White House, Stephen Look.
He added that there was “very good reason” to believe that the economy would improve, citing trade agreements and Trump’s tax cuts.
But for Trump, the broader conclusion of the public of a weakening labor market caused an unprecedented response: shortly after the 2 PM ET on Friday, the president announced his intention to fire the head of the Office of Labor Statistics on what he said were errors in job data, as well as accusations that the agency had “manipulated” the numbers before elections 2024. None of the accusations has been corroborated.
The measure sent shock waves through Washington, and some experts warned that he risked to reduce the United States to the level of authoritarian regimes.
“President Trump is once again destroying the credibility of our government by saying goodbye to experts and non -partisan officials because they do not like the facts they present,” said Max Stier, CEO of the non -partisan association for the public service. “The governments that go along this path are in ugly territory very quickly.”
It was not clear if the outgoing BLS commissioner, Erika Mtntarfer, designated by the Biden administration, would seek to challenge her removal in the court. It turns out that, in addition to nominating a new head of the critical data agency, Trump can also appoint a new member of the Fed Rate Fixing Board after Adriana Kugler, another person designated by Joe Biden, unexpectedly announced his resignation on Friday night. Both nominees must still be confirmed by the Senate, which remains closely controlled by the Republican Party.
When asked if the White House continued to house concerns about the economy’s direction, Kush Desai, a White House spokesman, issued the following statement:
“In his first term, President Trump used an economic agenda in the United States to offer historical prosperity of the working class and the first reduction in the inequality of wealth and income in decades. In his [second] Term, President Trump is implementing the same combination of deregulation policies, more fair trade and tax cuts in favor of growth at an even greater scale, as these policies enter into force, the best is yet to come. “
That opinion is not shared among other economists.
“All this is worrying: a weakening economy, deceleration of the labor market, the increase in inflation, the increase in tariffs, political influence on a statistical agency, a more political influence on the Fed, tensions with Russia and the beginning of a market correction,” wrote the economist of the Chief of Party Greg Daco in X.
