US actions fell on Friday after the new radical rates issued by President Donald Trump. A weak works report intensified the sale of the sale, since a downward review of previous estimates indicated that a counterclaimment had begun in May as they seized the initial tariffs.
The combination of high rates and a slow hiring could precipitate the United States towards a double economic zipper known as “stagflation”, in which the economy slows down while prices increase, said Moody’s Analytics analysts, the accounting firm EY and Fitch Ratings to ABC News.
Such perspective could present a challenge for the Federal Reserve, which runs the risk of further heating inflation if it reduces interest rates or inclines the USA in a recession if it increases rates.
The latest job data equals a “bright red flare that the economy is being harmed by tariff policy,” ABC News told the economy, “ABC News.” And that is before tariffs are completely implemented. “
Trump’s executive order on Thursday night established the rates that will be applied against almost 70 countries, ranging from 10% to 41% in what an administration official Trump acclaimed as the beginning of a “new trade system.” The new tasks are now in force on August 7.
The new levies increased the average effective rate to 18.3%, the highest since 1934, the Yale Budget Laboratory saying.
The tariffs announced on the night they arrived hours before a job report on Friday morning showed a cooling marked in hiring.
The United States added 73,000 jobs in July, which arrived well below an average of 130,000 added jobs every month this year, according to data from the United States Labor Statistics Office (BLS).
The report also provided new estimates for two previous months, significantly eliminating the estimation of the government of the added jobs in May and June. During those two months, the United States added 33,000 combined jobs, much lower than a previous estimate of 286,000 jobs, showed the BLS data.
Trump fired the BLS commissioner after the job report was published on Friday.
“Now we have evidence that, in fact, employment growth has slowed down significantly in recent months,” Gregory Daco, chief economist of the accounting firm EY, told ABC.
The Trump administration described downward reviews as an inopportune sign for the economy of the United States.
“Obviously, they are not what we want to see,” Stephen Miran, president of the Blanca House Economic Advisors Council, said Friday.
Donald Trump signs an executive order that restarts the presidential aptitude test in public schools, on July 31, 2025, in the Roosevelt room of the White House in Washington.
Jacquelyn Martin/AP
They look blamed for the weak performance in part to the uncertainty linked to the destination of Trump’s internal expense legislation, as well as the final result of the tariff policy. The Congress approved Trump’s expenditure measure earlier this month; More recently, Trump announced a new Round of Rates Thursday night.
“Both sources of uncertainty are resolved,” Look said. “We hope things become materially stronger from here, now that our policies begin to qualify in place.”
Fluctuating tariffs leave companies with higher costs related to taxes together with continuous uncertainty, in doubt about where expenses will remain from one month to another, according to EY’s dacco.
In response, many companies will choose to avoid or delay investment, which runs the risk of less hiring and the slowest expense for consumers, he added.
“We should expect a more pronounced deceleration in economic activity during the second half of the year,” Daco added.
The possible cooling of economic growth can coincide with an increase in inflation, analysts said, and pointed out that importers generally transmit a part of the tax burden on buyers in the form of higher prices.
Until now, the US economy has challenged the fears of analysts of a large price increase induced by the rate. But tariffs contributed modestly to the emergence of inflation last month, analysts previously told ABC News, pointing out an increase in the price of very imported items such as toys and appliances.
Inflation is 2.7%, which is almost a higher percentage point than the target rate of 2%Fed.
Olu Sonola, head of the United States regional economy at Fitch Ratings, told ABC News that his company expects inflation to increase at least an additional percentage point for next year.
In theory, the Central Bank could help the economy navigate the winds against adjusting interest rates, but possible stagflation raises difficulty for the Fed.
If the Fed increases interest rates as a means to protect against inflation induced by the rate in this scenario, run the risk of querying loans and slowering the economy further.
On the other hand, if the Fed reduces rates to stimulate the economy against a potential deceleration, threatens to increase spending and make inflation worse.
“Clearly presents an enigma for the Federal Reserve in the future,” said Sonola.
