Trump’s Economic Double Whammy: Soaring Costs, Shrinking Jobs

Trump’s Economic Double Whammy: Soaring Costs, Shrinking Jobs

Inflation is climbing, job opportunities are shrinking, and American families are finding it harder than ever to stay afloat. The Bureau of Economic Analysis reported today that the Personal Consumption Expenditures (PCE) price index rose 0.3% in August and 2.7% over the past year, while core PCE increased 0.2% month-to-month and 2.9% year-over-year. Inflation has been rising steadily in recent months with no signs of easing, exacerbating pressure on household budgets as the job market is losing steam.

Bottom line: The financial pressure on American families is intensifying. 60% of Americans report that their household situation is worsening – nearly double the 35% who felt that way a year ago.

Alex Jacquez, Chief of Policy and Advocacy at the Groundwork Collaborative, shared his reaction:

“With one foot on the gas driving up inflation and the other on the brakes stalling job opportunities, President Trump is sending the economy into a tailspin. He hasn’t kept his promise to lower costs for the American people. Instead, the president has taken working families on a reckless ride, driving up prices on everyday essentials—from health care to groceries—making life even harder to afford.”

This week in the Trump Slump, new polling and economic indicators continue to show that President Trump’s actions are deeply unpopular, hurting the economy, and harming America’s workers.

Polling and Economic Indicators on Trump’s Handling of the Economy:

• Rising costs are squeezing families. Trump’s tariffs and ongoing economic uncertainty are putting upward pressure on inflation.
  • Families continue to face higher costs, especially in essentials like health care services and groceries, where services are driving inflation.
  • Everyday items like clothing, coffee, and household appliances have already climbed sharply as a result of Trump’s tariffs, according to research from Harvard and Northwestern economists.
  • Overall, goods prices are rebounding in PCE data released today. Prices are up at the fastest pace since the COVID inflation surge across all major goods categories, and increases in durable goods prices are currently larger than at any point from 1995-2020.
• Inflation is forecasted to remain elevated. The Federal Reserve’s projections show PCE inflation at 3.0% in 2025 and still above target at 2.6% in 2026.
• With high prices rising even further, families are being forced to cut back.
  • 58% of households expect to reduce spending in light of higher inflation expectations, according to the University of Michigan’s consumer survey.
  • More than a third of low-income consumers are buying less than they want at the grocery store because of higher prices, according to Deloitte’s ConsumerSignals survey.
  • Diners are turning to value menus when they’re able to eat out: Circana reports that value menu traffic was up 1% in Q2 even as overall restaurant visits declined 1%.
• Consumer sentiment has dropped sharply, now sitting 26% below its December level.
  • Year-ahead inflation expectations are up to 4.7%, from 2.8% in December, according to the University of Michigan’s consumer survey.
  • 44% of consumers say high prices are cutting into their finances, the highest share in a year.
• High prices come alongside a slowing economy. Seasonal retail hiring is on track to fall to its lowest level since 2009, according to Challenger, Gray & Christmas. At the same time, ADP data show wage growth for low-income workers has slowed sharply, widening the pay gap between everyday Americans and the highest earners.

Additional Indicators:

• Diners are turning to value menus when they’re able to eat out: Circana reports that value menu traffic was up 1% in Q2 even as overall restaurant visits declined 1%.
• More than a third of low-income consumers are buying less than they want at the grocery store because of higher prices, according to Deloitte’s ConsumerSignals survey.
• 58% of households expect to reduce spending in light of higher inflation expectations, according to the University of Michigan’s consumer survey.
• Only 37% of U.S. adults approve of Trump’s handling of the economy, a new poll from the Associated Press-NORC Center for Public Affairs Research found. This is down from 43% in August and consistent with his overall approval rating. The economy is an especially weak spot among independents, with just about 2 in 10 giving him positive marks.

Expert Commentary:

• Executive Director of Groundwork Collaborative Lindsay Owens spoke about dynamic pricing and how it could affect tourism in Las Vegas: “These prices aren’t going up because Caesars Palace is running out of sunscreen or running out of beer. They are charging you more because they think they can. And they are testing the limits of just how much you’ll be willing to pay in the casino before you finally get fed up and run outside to the CVS.”
• Chief Economist at the Center on Budget and Policy Priorities Gbenga Ajilore broke down the latest Q2 GDP estimate and what it means for the U.S. economy: “Here is the main takeaway: 2025 has shown the trajectory of this economy is heading in the wrong direction. Both the federal reserve and congressional budget office are forecasting higher inflation and higher unemployment for the rest of the year. The policies being implemented are creating the softness in this economy. Rising prices are being driven by tariffs and restrictive immigration policy. The labor market is frozen with very few firms hiring, making it difficult for people to find good paying jobs. Unless policy changes, we can expect further deterioration of the economy in the second half of 2025.”
• Managing director of policy and advocacy at Groundwork Collaborative Elizabeth Pancotti explained what the rise in Labubus signals about the U.S. economy: “It’s something that’s a little bit trivial that won’t break the bank that you buy on a whim. We see that these purchases actually tick up ahead of, or during, economic downturns because other larger purchases tick down.”
• Economist at Berenberg Atakan Bakiskan commented on Trump’s decision to impose a $100,000 application fee for the H-1B visa: “Taken together, the erosion of trust in institutions, a loss of human capital, tariffs, chronic uncertainty, and unsustainable fiscal policies can raise the tail risk of a financial crisis in the US. In the long run, they may set a path for an even weaker dollar and higher long-term yields.”
• Former Deputy Director of the National Economic Council Bharat Ramamurti spoke about America’s unbalanced economy: “50% of spending happened from the top 10% of earners, and that means the bottom 90% is pinching pennies. And if you look at the data on wages: Wage growth has been slowing down, even as prices at the grocery store and elsewhere have been going up faster than wages have. So really what you have is this unbalanced economy, where the top 10% are doing well…but the bottom 90% of people, middle-class people, are really struggling. And you see that in a wide variety of data and you see it in Trump’s approval ratings on the economy, which are in the pits.”
• Economist and senior fellow at the Peterson Institute for International Economics Justin Wolfers reacted to Stephen Miran’s dissent on the recent Fed cut rates: “A first-day dissent—by a White House official on leave, before a full briefing—doesn’t read as data-driven debate. It reads as ideology. That alone can dent the perception of independence, and that perception is the Fed’s superpower.”
• Chief economist at Moody’s Analytics Mark Zandi explained how a government shutdown would affect the U.S. economy: “The economy is quite vulnerable. In a more resilient time, I think even a prolonged shutdown wouldn’t derail the economy. But in the current economy, it could very well be the thing that pushes us under.”