海角大神

With economy sagging, political risks rise for Trump and Republicans

Headlines this week suggest a tougher climate both for U.S. consumers 鈥� facing high inflation 鈥� and for workers in a slowing job market.

And when the economy confronts challenges, the fallout can spill quickly into politics.

Two of President Donald Trump鈥檚 signature policies 鈥� raising tariffs on imported goods, and reducing immigration via deportations and the cancellation of work permits 鈥� have a direct bearing on the economy.

Consumer prices are rising at a 2.9% year-over-year rate as of August, pushed up by the tariffs and a pickup in the cost of services, the Labor Department鈥檚 Bureau of Labor Statistics (BLS) reported Thursday. That鈥檚 up from 2.7% in July and as low as 2.3% in April.

On Tuesday, another BLS report , adding to a sense of economic malaise. Over this period, employers added nearly 1 million fewer jobs to the civilian workforce than the BLS had originally estimated. Since March, job growth has decelerated, from more than 70,000 net gains per month , as employers held back on hiring.

The worries on Main Street come as America is heading toward an election year.

In 2024, Democrats lost the White House and the Senate after President Joe Biden saw inflation surge on his watch. Mr. Trump has tried to preempt blame for a slowing economy during his term by repeatedly attacking Mr. Biden and Federal Reserve Chair Jerome Powell, whom he has castigated for not cutting interest rates sooner.

For Republicans who hold power in Washington, Mr. Powell and former President Biden make 鈥済reat villains鈥� in explaining away the latest headlines, says Matt Wylie, a GOP strategist based in South Carolina. 鈥淪omebody has to be blamed for the mess we鈥檙e in,鈥� he says.

But that only gets politicians so far if the economy is sputtering next year, when voters will determine who controls Congress.

鈥淩epublicans need to be really concerned about the state of the economy,鈥� he warns. 鈥淎mericans just don鈥檛 feel like it鈥檚 going in the right direction.鈥�

, 39% of respondents said the economy was poor, up from 28% who answered this way two months ago. The share who said the economy was good or fair fell from 65% to 54%. Only 5% said it was excellent in the survey of 1,644 adults taken Sept. 5-8.

More unemployed people than job openings

It鈥檚 a 鈥渃ooling but not collapsing jobs market,鈥� says James Knightley, chief international economist at ING Financial Markets, via email. But, he adds, 鈥淲e now have more unemployed people than there are job vacancies.鈥�

On Thursday, the Labor Department said the number of people seeking unemployment benefits .

Unemployment for Black adults has risen significantly, to during a postpandemic boom.

The nation鈥檚 overall jobless rate has edged up, too, but at 4.3% it isn鈥檛 historically high. This suggests that the economy may be generating enough jobs for a workforce that has contracted as a result of Mr. Trump鈥檚 immigration enforcement, including workplace raids and deportations. Some analysts say this reduction in labor supply 鈥� 鈥� is tempering the unemployment rate. But it鈥檚 also contributing to slowing demand since fewer workers means less consumer spending and makes it harder for employers to staff some jobs.

鈥淵ou鈥檙e seeing a disconnect between the promise that removing immigrants from the workforce would improve the economy and the reality that that鈥檚 simply not the case,鈥� says Stuart Anderson, a former staff director of a Senate subcommittee on immigration.

Inflation well above the Federal Reserve鈥檚 target of 2% would usually suggest tight monetary policy to tamp it down. But unlike in 2021-22, when prices began to climb under the Biden administration, energy and housing costs aren鈥檛 spiking, nor are average wages growing, since the jobs market is so tepid, says Mr. Knightley.

That鈥檚 why virtually everyone predicts that the Federal Reserve will lower the cost of borrowing next week when its rate-setting committee meets. Wall Street expects the Fed to keep cutting, as the risk of persistent inflation is outweighed, for now, by the reality of an economic slowdown.

For the Fed, the reasoning may be both economic and political. With key indicators flashing red, the central bank wants to avert a recession. Then there鈥檚 Mr. Trump鈥檚 drumbeat of disapproval of Mr. Powell for not cutting rates sooner to support economic growth. But even without this political pressure, which has alarmed Fed-watchers as impinging on its independence, analysts say the faltering economic outlook would be reason to take action.

Statistics agency under scrutiny

The BLS has also been a target of Mr. Trump鈥檚 ire. and installed a new one over a jobs report that the White House labeled unreliable. On Tuesday, his press secretary, Karoline Leavitt, criticized the BLS鈥� larger-than-expected revision 鈥� a routine review that uses data not available when the original report was produced 鈥� and blamed Mr. Biden for stewarding a weak economy for much of the period.

鈥淭oday, the BLS released the largest downward revision on record proving that President Trump was right: Biden鈥檚 economy was a disaster and the BLS is broken. This is exactly why we need new leadership to restore trust and confidence in the BLS鈥檚 data on behalf of the financial markets, businesses, policymakers, and families that rely on this data,鈥� she said in a statement. She also said Mr. Powell had 鈥渇ailed the American people鈥� and must 鈥渃ut rates now.鈥�

The White House has argued that tariffs support domestic manufacturing and employment and that U.S. citizens stand to benefit from a crackdown on illegal labor and more secure borders.

Last month Mr. Powell, who was appointed by Mr. Trump in his first term to chair the Federal Reserve, gave a speech in which he obliquely commented on immigration policy鈥檚 effects on the labor market. that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising.鈥�

Those downside risks are now front and center. The BLS revisions show that the labor market was already weak at the start of the year and has slowed to the point where the economy may be shedding jobs. But it鈥檚 hard to be sure, when businesses鈥� response rates to surveys have dropped and the BLS struggles to track employment at smaller companies that are more likely to close, says Donald Grimes, a labor economist at the University of Michigan.

The revisions aren鈥檛 evidence of incompetence or malpractice, he says. 鈥淭heir goal is to get the best data out there, but sometimes they don鈥檛 have the tools at the time.鈥�

Fewer immigrants, fewer workers

An estimate that counts 911,000 jobs that didn鈥檛 materialize sounds large. But it鈥檚 a small share of a . The benchmark revisions, which are preliminary, are based on analysis of quarterly unemployment insurance filings. Labor Department officials have in the past complained that staff shortages make it harder to produce accurate jobs estimates.

Under Mr. Biden, the labor force expanded due to a postpandemic surge in legal and illegal migration and the issuance of work permits for noncitizens. This expansion more than offset the number of native-born workers who retired or left the workforce for other reasons.

Since January, estimates by the U.S. Census Bureau show a net decline聽of 1.1 million foreign-born workers, though analysts caution that sample sizes may be too small to be accurate. In migrant-dependent sectors such as agriculture and construction, employers have complained of growing labor shortages. The Trump administration has ramped up deportations, ended programs that authorized work for noncitizens, and suspended new refugee admissions. Other would-be migrants may have been deterred from working in the United States.

Mr. Anderson, who runs the National Foundation for American Policy, a think tank that focuses on migration, says reducing the number of working-age migrants is unlikely to lead to more hiring of native-born workers, since the reasons people aren鈥檛 working are complex and don鈥檛 track with immigration enforcement. Some are retired. Others are on disability benefits or caring for family members. , lower than it was before the pandemic.

鈥淚mmigration policy isn鈥檛 going to solve those鈥� issues, says Mr. Anderson, noting that people who aren鈥檛 working .

Ahead of next year鈥檚 midterms, Republicans will remain in lockstep with the president鈥檚 immigration crackdown, predicts Mr. Wylie, especially if it distracts from a slowing economy. And those who harbor doubts about Mr. Trump鈥檚 handling of the economy will try to turn the tables on Democrats by warning of the leftist excesses of candidates such as Zohran Mamdani, the front-runner to be New York鈥檚 next mayor and already a go-to GOP target.

鈥淭he worse the economy gets, the louder we鈥檒l point,鈥� he says.

The economic cycle could yet turn in Republicans鈥� favor, he notes. In 1982, the party lost seats under President Ronald Reagan as growth turned negative. Two years later, it won a landslide on the back of an economic takeoff.