Groundwork’s Jacquez Says Fed Decision to Maintain Rate Underscores Growing Economic Pain
Groundwork’s Jacquez Says Fed Decision to Maintain Rate Underscores Growing Economic Pain
Today, the Federal Reserve held the federal funds rate at 3.50% to 3.75%. The decision comes at a moment when the economy is showing clear signs of strain caused by Trump’s economic agenda: the job market has stalled, price pressures remain elevated, and working families continue to face affordability challenges. Consumer confidence plummeted in January, with Americans expressing more pessimism about the state of the economy than at any point during the COVID pandemic.
Alex Jacquez, Chief of Policy and Advocacy at the Groundwork Collaborative, issued the following reaction:
“The Fed’s decision reflects an economy that is clearly losing its momentum. Job growth has stalled, prices are still rising, and Americans have no choice but to pull back as their budgets are stretched past the breaking point. From chaotic tariffs to attacks on health care and clean energy, Trump’s economic mismanagement is pushing up costs while foreclosing opportunities for working people. Until the real cause of this economic slowdown is addressed, working families will continue paying the price”
Additional Analysis
- Household consumption continues to show signs of strain. According to the Federal Reserve’s Beige Book, low- and moderate-income consumers are increasingly price sensitive, while most Districts report slower residential real estate sales, construction, and lending activity. Consumer spending remains focused on necessities such as housing, health care, utilities, transportation, insurance, and groceries, while discretionary spending is well below pre-2021 levels. Families are forced to stretch budgets to cover basic needs and forgo nonessential purchases.
- Job growth is weak and narrowly concentrated. Job growth has stalled and revisions to initial payroll estimates have trended downward as businesses hold off on as many long-term decisions as possible in the wake of Trump’s chaotic economic agenda.
- The limited job gains are concentrated in health care, which will face drastic cuts from the Republican budget law’s slashing of Medicaid and the Affordable Care Act.
- The unemployment rate climbed to 4.4%, up from 4.0% in January. Long-term unemployment is at a four-year high after rising 26% over the past year.
- Inflationary pressures persist as firms pass rising input and tariff costs through to households. The December Consumer Price Index shows inflation running at 2.7% over the past year, persistently above the Federal Reserve’s 2% target. This is likely understated due to lingering effects of the government shutdown.
- The Beige Book reports that many businesses are still passing higher input costs on to consumers and expect additional price increases in the coming months. Recent CPI and PPI data also suggest core PCE inflation is picking up again. These signals indicate that cost pass-through has not yet peaked, even as demand among working families cools.
- Research also shows that American households and businesses are bearing nearly all of the cost of recent tariffs. Even Amazon CEO Andy Jassy said last week that some sellers are now passing tariff-related costs on to customers, reinforcing that current price pressures reflect the fallout from Trump’s chaotic economic mismanagement, not strong consumer demand.
- Clean energy manufacturing investment has slowed sharply over the past year. Companies spent less on U.S. factories producing batteries, electric vehicles, and solar panels in 2025 than the year before, reversing a period of rapid growth, according to new data from Rhodium Group and MIT’s Clean Investment Monitor. Plans for new clean-energy factories have also fallen, while cancellations of previously announced projects have risen. This pullback signals weakening business confidence in long-term manufacturing investment, threatening American jobs.
