72 hours of chaos: Trump just shook the $30 trillion US economy - inflation spikes, jobs stall, and investors panic

Economic Times

5 hours ago

Donald Trump US economy 2025: Donald Trump's policies raised concerns about a US economic slowdown. Job growth slowed significantly in July. Trump fired Erika McEntarfer, head of the Bureau of Labor Statistics. He accused her of manipulating data. Experts warned of a dangerous precedent. Inflation remained high, and economic growth slowed. The S&P 500 fell. Trump also attacked Federal Reserve Chair Jerome Powell.
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US Job Growth Stalls Sharply in July, Missing Expectations
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Donald Trump Fires Bureau of Labor Statistics Head After Disappointing Jobs Report
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The US economy appeared surprisingly resilient for months, as inflation had cooled, jobs were steadily growing, and consumer confidence was stabilizing, but in the span of just 72 hours, that sense of calm was disrupted, and all fingers point to US president Donald Trump, as per a report.The Trump administration's trade, labor, and economic policies sparked renewed fears of a slowdown in the world's largest economy, according to the Washington Post.Erica Groshen, senior labor market adviser at Cornell University, highlighted that 'Government policy [has] been the biggest change over the past couple of months,' as quoted in the report.The tipping point came Friday, when the government reported that the US added just 73,000 jobs in July, far below expectations, as per the report. Even worse, previous months' job gains were revised downward by 258,000, cutting total hiring over the past quarter to a weak 106,000, a drastic decline from the same period in 2024, as reported by the Washington Post.ALSO READ: Tesla board approves $30 billion stock award for Elon Musk amid leadership uncertainty Within hours of the report,, accusing her without evidence of manipulating employment data to damage him politically, as per the report. Markets fell, economists raised red flags, and confidence in official US data took a hit, according to the report.Heidi Shierholz, a former Labor Department chief economist pointed out that firing a nonpartisan analyst for delivering bad news was 'straight out of an autocratic playbook,' adding, 'If policymakers and the public can't trust the data - or suspect the data are being manipulated - confidence collapses and reasonable economic decision-making becomes impossible. It's like trying to drive a car blindfolded,' as quoted in the Washington Post.ALSO READ: As the July jobs report paints a grim picture, 114 companies plan layoffs in August - is yours on the list? The economic warning signs were already flashing. Inflation, which helped fuel Trump's return to the White House, is proving unexpectedly stubborn, consumer spending has slowed, and over the first half of 2025, the US economy grew at an annual rate of just 1.2%, down sharply from 2.4% at the end of 2024, as reported by the Washington Post.As investor confidence wobbled, the Sundefined it's the uncertainty coming directly from the White House, according to the report.Eric Winograd, senior vice president of AllianceBernstein, said, 'We're seeing dramatic changes in policy across multiple dimensions. Trump inherited an economy that was in very good shape, that was in balance. He is trying to move it to a different equilibrium. And the corporate sector and everyone else are in the process of adjusting,' as quoted in the Washington Post report.The firing of Erika McEntarfer, a widely respected labor economist who led the BLS since early 2024, was a watershed moment, as the US president's volatile temperament could cause additional economic harm by undermining market confidence in the government data that investors, business executives and policymakers require to make decisions, as reported by the Washington Post.Even William Beach, a former Trump appointee and ex-Heritage Foundation economist, called the move 'totally groundless,' as quoted in the report.The abrupt dismissal deepened fears that Trump is attempting to exert unprecedented control over the independent institutions that underpin financial markets and public trust, according to the report.Meanwhile, the US president resumed his public attacks on Federal Reserve Chair Jerome Powell, just days after praising him, according to the Washington Post report.Trump said, 'Jerome 'Too Late' Powell, a stubborn MORON, must substantially lower interest rates, NOW,' just one week after telling reporters the Fed chief was 'a very good man,' as quoted in the report.The US president has repeatedly hinted that he may fire Powell, a near-unprecedented move in US history, if the Fed doesn't slash interest rates, according to the report.Ironically, the weak jobs report Trump criticized could increase the likelihood of a rate cut in September, according to financial analysts, reported the Washington Post. Markets are now pricing in an 80% chance of a cut, according to CME Group, reported the Washington Post.Meanwhile, Adriana Kugler, the former US president Joe Biden-appointed Fed governor, announced her resignation Friday, giving Trump the chance to name a more loyal replacement, as per the report.He claimed, without evidence, that she manipulated job data to make him look bad politically.Only 73,000 jobs were added, far fewer than expected. Plus, previous numbers were revised down sharply.