The Trump economy slips into reverse

The economy is losing jobs at an accelerating pace. Thank tariff and other Trump policies.

The gap between President Trump’s view of the economy and the actual economy gets wider and wider.

“The roaring economy is roaring like never before,” Trump declared during his State of the Union speech on February 24. “We have more jobs, more people working today than ever before in the history of our country.”

The real economy, however, lost 92,000 jobs in February. That shrinkage in the labor market wasn’t a fluke. Since Trump took office, the economy has added just 15,000 new jobs per month, on average. In 2024, employment growth averaged 122,000 new jobs per month. And this trend is worsening. Since last August, the economy has lost 11,000 jobs per month, on average.

Economists have been generally upbeat about the overall economy, since GDP growth is holding up. But a prolonged hiring slump could change that outlook. “The economic story just changed dramatically,” University of Michigan economist Justin Wolfers said on social media on March 6. “Recession questions are back on the menu.”

An anemic job market isn’t the only worry. Retail sales dropped slightly in January, which could be a one-time drop due to bad weather. But consumer spending is a huge driver of GDP growth and if it falters, the overall economy will weaken, as well.

Trump says “inflation is plummeting,” which is another fib. The overall inflation rate is 2.4%, which is fairly close to normal. But a measure of wholesale inflation recently jumped, which means retail inflation will probably move upward as well.

Goldman Sachs expects the overall inflation rate to jump to around 2.8% this year, with core inflation, excluding volatile categories such as food and energy, closer to 3.1%. The official inflation numbers for February will arrive March 11.

The worst part for Trump is that a weakening economy is his own doing. Economists have warned since the start of his presidency that the tariffs Trump loves so dearly would raise prices and stunt economic growth. Inflation hasn’t skyrocketed, but tariffs are import taxes that raise costs throughout the supply chain, and it’s perfectly logical that hiring would slow as companies’ costs rise.

Trump says one goal of his protectionist trade war is to boost US manufacturing. There’s no sign of that happening. The opposite, actually. The manufacturing workforce has lost 100,000 jobs since he took office.

Trump’s immigration crackdown is probably another cause of the lousy job market. Some people mistakenly think that fewer migrants means more jobs for native-born Americans. But a shrinking labor pool causes lower economic growth, because there are fewer people earning and spending money. Companies only hire people when they need workers to meet demand. If demand drops, they need fewer workers.

Trump has now layered on top of this slowdown an unnerving war with Iran, which is raising oil and gasoline prices and threatening to further throttle growth. The US economy is resilient, but Trump is testing how much it can take. And how much voters can take, as well.