It is September 15, and we are drawing to the end of Q3. Here’s a look at where our economy stands.
Jobs seem to have flatlined, which was a gut punch of sorts. Over the summer, there was tepid job growth. In August, only 22,000 jobs were created. Then, for the second year in a row, the Bureau of Labor Statistics issued a massive revision of the job numbers for the past year, essentially dividing the number of previously accounted for jobs in half. That was a blow, and as our Sophie Starkova noted, “No wonder the American people didn’t feel like it was ‘the best economy in decades’ and that they couldn’t get ahead.”
Inflation hit a 2.9% annual rate in the latest report, and it’s going in the wrong direction.
Tariffs are affecting food and goods. Businesses warn that they have burnt through their stockpiles of goods and are now having to really factor in the tariffs to their consumer prices. As a result, the prices on many goods are rising — much to the chagrin of the American consumer. According to The Wall Street Journal, “Consumer prices climbed 0.4% in August and 2.9% over the past year, both the most since January. Price increases last month were broad-based, hitting food consumed at home (0.6%), alcohol (0.6%), children’s shoes (1.5%), clothing (0.5%), new cars (0.3%), used cars (1.0%), housing (0.4%), hotels (2.6%), vehicle repair (5.0%), air fares (5.9%) and more.”
People from the middle class on down are feeling the burden of their income stalling while prices continue to rise, even as wholesale prices have come down.
Next Wednesday, the Fed will have the Federal Open Market Committee discuss a rate cut. The likely outcome of the meeting will be a 25 basis-point cut, with a tiny chance of a 50 basis-point cut. Central bank policymakers are having to weigh the stagnant job market against the inflation rate, which is still well above the target of 2%.
On the plus side, the stock market is booming; the Dow Jones is up more than 7% for the year so far, and the NASDAQ is up more than 14%. Companies are investing and creating infrastructure for AI. The booming business in that sector is likely covering a lot of other economic woes. That benefits the millions of Americans invested in the stock market.
Mortgage rates have come down. It’s continuing a downward trend that has been accumulating over the past 11 months. According to Yahoo Finance, “The average rate for a 30-year fixed mortgage was 6.35% in the week through Wednesday, according to Freddie Mac data, down from 6.5% a week earlier. The rate on a 15-year loan was 5.5%, down from 5.6%. Both marks are at their lowest point since October 2024.”
However, the overall homeownership costs have gone up. Furthermore, the historically high prices of homes are causing young people to delay their first home purchase, while others are choosing not to sell due to the high cost of moving.
It’s not all bad news, but there is a looming fear of stagflation lingering in the background.
For the president, the economy is an ever-present problem, and people will start screaming for his attention if stagflation sets in. People recall the economic prosperity of his first presidency and are hopeful that he can reverse the economic decline “gifted” to him by the previous administration. After a week like last week, we Americans could use some good news in one arena of our concerns.
