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**AUGUST 19, 2025**

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When Donald Trump fired the head of the Bureau of Labor Statistics after a weak jobs report, it was a sign of weakness—both in Trump’s belief in his economic policy changes, and in the state of the economy itself. I thought it was worth setting a baseline [link removed], taking the data we have about the economy right now that can be trusted, and painting a picture for how ordinary workers and consumers are experiencing things. That picture isn’t totally grim, but it’s more like a slow leak in a balloon, with stable prices and job security gradually going away.

**–David Dayen, executive editor**

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DAMIAN DOVARGANES/AP PHOTO

What the Economy Really Looks Like [link removed]

The Trump administration’s war on reality will make it meaningfully difficult to understand the health of the economy in the coming months. If data is either not being collected or is no longer reliable, now that Trump has fired the head of the Bureau of Labor Statistics as punishment for weak jobs numbers, it’s hard not to succumb to bias or motivated reasoning, on either side of the political divide. So before we get murkier radio signals, we need to assess the numbers we have now, to inform the trends for the future.

Most of this picture is mixed and influenced by a bunch of different factors. But we can say one thing definitively: Hiring has been relatively dormant since Trump took the oath of office. Only 597,000 jobs have been added in the first seven months of the year, a 44 percent drop from the first seven months of 2024, as **former Biden economist Heather Boushey notes** [link removed]. The year has seen low hiring and a low quit rate, as people hunker down in the jobs they have. There are fewer entry-level positions and **Americans aren’t moving very much** [link removed] for work. That’s a housing story but it’s also a job security story, and the expectations are even worse: The University of Michigan survey shows expectations for a higher unemployment rate next year at the **highest level since the Great Recession** [link removed].

Maybe artificial intelligence is playing a role here, though concluding that for sure seems premature. Or maybe the behavior of the ill-fated Department of Government Efficiency is filtering down to corporate boardrooms. But the most likely reason for sluggish hiring is the tremendous uncertainty from the tariff announcements, regulatory policy, and Trumpian wild cards. An economy based on individual whim is not one where businesses can **plan for the future** [link removed]; indeed, 37,000 manufacturing jobs have been lost since the “Liberation Day” tariff announcement in April, and the subsequent flurry of trade adjustments.

I think you can see the consequences of uncertainty come forward in the **explosion in corporate stock buybacks** [link removed]; that’s a sign of retrenchment, where money that could be deployed or invested is instead pushed out to shareholders. No wonder markets are near all-time highs while ordinary workers feel miserable.

 

The only area where this investment retrenchment and uncertainty is not in evidence comes from the **insane capital expenditures** [link removed] for AI computing power, which is propping up the economy almost by itself. That’s why **municipal pushback to data centers** [link removed] will be one of the more fascinating developments of the next few years. And it’s why we should pay a lot of attention to whether AI is a **viable business** [link removed], whether its gains are accelerating or stagnating, and whether too much of this capacity deployment is on spec and fated to cause a crash. (AI is creating other economic problems, but we’ll touch on those later.)

Typically in a consumer spending–driven economy, when consumers slow down, so does the economy. So what do we see there? Personal consumption has **surprisingly held up** [link removed], but we have to disaggregate that. We’re seeing a resumption of **the “K-shaped” economy** [link removed], where total spending is buttressed by the top income brackets, while everyone else sinks. Half of all consumer spending is coming from the top 10 percent, and these price-insensitive customers are absorbing higher inflation. Low-income consumers, by contrast, are **taking on more credit card debt** [link removed], the Boston Federal Reserve reports, because they cannot keep up with rising prices. More than three-quarters of all consumers **do not expect to spend** [link removed] their usual amount in the next year, a sentiment consistent with a high-inflation economy.

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