Stagflation

Mr. Trump's tariffs are now clearly fueling inflation, particularly in goods such as home appliances, cars and food.  In the first six months of the year, real (that is, inflation-adjusted) consumer spending, the main driver behind business cycles and robust economic expansion, barely grew, after rising 3 percent last year.  G.D.P. growth slowed by about half, to 1.2 percent this year from 2.5 percent last year.  When overall growth falls that sharply, the labor market tends to follow, which is precisely what happened: Job growth, at 35,000 per month on average between May and July, is dangerously close to stall speed.

While presidents always take credit for good economic news and try to deflect bad news (in this president's case, by firing the messenger who delivered it), it's often hard to link what's going on in the economy to the current administration.  Not this time.  Whether it's historically high tariffs that never quite seem to stabilize, deportations that threaten to seriously disrupt labor supply in sectors like construction and health services, or a reverse-Robin Hood, budget-busting bill that takes money away from those most likely to spend it, Mr. Trump's policies have pushed economic uncertainty to levels last seen during the onset of the pandemic.  This uncertainty has damped investment, hiring and consumption, while the tariffs increase prices.  In other words: stagflation.

-- Jared Bernstein, chair of President Joe Biden's Council of Economic Advisers from 2023 to 2025, and Ryan Cummings who served the council as an economist from 2021 to 2023, New York Times, "The Economy Is Starting to Pay for Trump’s Chaos" (10 August 2025)