Groundwork’s Jacquez Says Fed’s Small Rate Cut Can’t Undo the Damage Trump’s Mismanaged Economy is Having on American Households
Groundwork’s Jacquez Says Fed’s Small Rate Cut Can’t Undo the Damage Trump’s Mismanaged Economy is Having on American Households
Today, in response to a stalling job market, the Federal Reserve cut the federal funds rate by 25 basis points. This action comes amid rising inflation, fueled by the Trump Administration’s chaotic and unpredictable economic agenda that is squeezing American households at every turn.
Alex Jacquez, Chief of Policy and Advocacy at the Groundwork Collaborative, shared his reaction:
“Today’s small rate cut will do little to address Trump’s economic turmoil. Driven by a stagnant job market, the Fed’s move offers no real relief to American households, consumers, or workers — all of whom are paying the price for Trump’s economic mismanagement. No interest rate tweak can undo that damage.”
ADDITIONAL ANALYSIS
- Inflation is rising. CPI increased in August, marking four consecutive months of increases. Families continue to feel the strain from higher grocery prices, clothing , and automobiles. Key input prices for producers continue to rise and tariff costs are mounting, neither of which rate cuts are poised to ease.
- The labor market is losing momentum. The BLS reported only 22,000 jobs added in August, following a downward revision that put June in negative territory. Monthly job growth has effectively stalled since the spring, underscoring a weakening outlook for workers and families. Real average hourly wages ticked down in August, forcing workers to stretch already thin budgets even further.
- Household cash flow is tight. According to the Federal Reserve Bank of New York, household debt climbed to a record $18.4 trillion in the second quarter of 2025, up 3.3% from a year earlier. Credit card balances also rose by $27 billion in a single quarter, up 5.8% over the past year. Delinquencies also edged higher. Families are leaning more on credit to cover everyday costs, leaving them increasingly vulnerable to an economic slowdown and higher prices.
- Growth is slowing. Real GDP growth declined by 50% between the second half of 2024 (2.8%) and the first half of 2025 (1.4%). Further, growth in real final sales to private domestic purchasers – a proxy for underlying demand – slowed from 3.2% in the second half of 2024 to 1.9% in the first half of 2025.
- Miran is already doing Trump’s bidding. Newly confirmed Governor Stephen Miran immediately proved his allegiance to Trump’s call for “bigger” rate cuts, as the lone dissenting voice calling for an even larger cut. One governor was also wildly out of step with the others in the “dot plot” that forecasts the final interest rate for the year. While nearly six saw no more rate cuts, two forecast one cut, and nine showed two additional cuts, one governor–almost certainly Miran–forecast five additional 25 basis point cuts in 2025.
- Trump’s tariffs are passing through to consumers. Powell noted in his post-meeting press conference that while consumer pass-through has been smaller and slower than anticipated, companies have every intention of passing through higher costs in time and we are already seeing goods inflation picking up.
