Last year, Donald Trump was vocal about the economy, leveraging his position as a presidential candidate to critique Democrats on issues of inflation. He capitalized on the ongoing concerns surrounding the high cost of living, working his way back to the White House with promises of immediate economic relief. However, economists raised alarms that his proposed plans could potentially exacerbate inflation, driving prices even higher.
Recent jobs numbers have served as a stark reminder of how quickly economic conditions can shift, posing a significant political risk for Trump and his party as elections loom. The economy added merely 22,000 jobs in August, a figure that signals a stalling labor market. As my colleague Lydia DePillis pointed out, this lackluster performance raises concerns about the sustainability of job growth.
Looking back, the situation appears even bleaker. A revision to the job figures for June revealed that the labor market actually lost 13,000 jobs that month, marking the first negative employment number since December 2020. Such data underscores the precarious state of the economy and the potential implications for the upcoming elections.
There are additional indicators suggesting economic distress. A crucial measure of underlying inflation has increased over the summer, largely attributed to Trump’s tariffs which have pressured prices upward. This has resulted in rising costs for essential goods such as furniture, appliances, and clothing. Moreover, manufacturing activity has experienced a decline for six consecutive months, further complicating the economic landscape.
As we look forward to the midterm elections next year, the future of the economy remains uncertain. Today's news could present a potential silver lining for Trump: the deteriorating labor market may lead to a long-desired cut in interest rates, as noted by my colleague Colby Smith. However, for now, it is evident that the president faces significant economic challenges that could impact his political fortunes.
