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Donald Trump faces economic headwinds as recession fears grow

  • By Al Mayadeen English
  • Source: Washington Post
  • 7 Sep 2025 19:51
4 Min Read

The Washington Post's David J. Lynch states that US President Donald Trump’s promises of an economic “golden age” are colliding with harsh realities as the US economy shows signs of a sharp slowdown.

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  • A trader works on the floor of the New York Stock Exchange Wednesday, March 20, 2024 (AP Photo/Craig Ruttle)
    A trader works on the floor of the New York Stock Exchange Wednesday, March 20, 2024 (AP Photo/Craig Ruttle)

Despite promises of a manufacturing-led “golden age,” the United States economy is showing clear signs of distress, Washington Post writer David J. Lynch writes. Job creation has slowed sharply, inflation remains elevated, and the broader US economy appears to be losing momentum under the policies of US President Donald Trump.

According to the Bureau of Labor Statistics, only 22,000 jobs were added in August, a dramatic slowdown compared to the 323,000 new jobs reported in December 2024.

Lynch states that the sharp decline follows Trump’s April launch of the “Liberation Day” tariff initiative, which many economists argue has had a chilling effect on investment and hiring.

The article cites Neil Dutta of Renaissance Macro Research, who states that, “The odds [of a US recession] are close to 50/50, maybe more. The case for a slowdown is pretty compelling.”

Former Obama adviser Jason Furman echoed those concerns, noting that outside of official recessions, the US job market hasn’t seen such weak hiring in over six decades.

Read more: WP: Trump escalates fight with ICC via sanctions on Palestinian NGOs

Trump blames Fed, defends tariff strategy

Lynch says that Trump administration officials continue to insist that recovery is just around the corner. Commerce Secretary Howard Lutnick said in an interview with CNBC that the US economy could rebound in six months. Trump himself promised that within a year, job growth would return thanks to investments in artificial intelligence and new technologies.

However, in the wake of the weak jobs report, Trump decided to press US Federal Reserve Chair Jerome Powell.

“Jerome ‘Too Late’ Powell should have lowered rates long ago. As usual, he’s ‘Too Late,’” Trump posted on Truth Social.

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Trump has long demanded aggressive rate cuts, calling for a 3-point reduction, a position not widely shared by private sector economists.

Inflation has cooled slightly, with the consumer price index now at 2.7 percent annually, but core inflation remains above the Fed’s 2 percent target.

Wall Street braces for interest rate cuts

Following the August jobs report, investors now expect the Federal Reserve to begin cutting interest rates. Analysts at Goldman Sachs and Barclays forecast three consecutive cuts starting in September, as the Fed shifts focus from inflation control to labor market stabilization.

The hope is that lower interest rates will revive the sluggish housing market and boost business confidence. Inventories of unsold homes have risen nearly 50 percent since December.

Fed Chair Powell recently signaled that risks to employment are rising, a statement widely interpreted as a prelude to rate cuts.

Read more: Trump says 'would love' to see Fed Chair Powell resign

Manufacturing slump and labor shortage deepen crisis

Trump’s tariff-heavy strategy has delivered the highest trade barriers since the 1930s, the Washington Post writer claims. Yet instead of a boom in domestic production, US factory employment has declined by 41,000 since February. Related sectors, such as mining and wholesale trade, have also seen job losses.

“We aren’t even seeing the beginnings of a tariff-related recovery,” economist Dean Baker of the Center for Economic Policy Research told the US-based paper. “It’s going in the wrong direction.”

The US job market is also feeling the strain from Trump’s crackdown on immigration. The foreign-born workforce shrank by over 1 million in the first half of the year, according to Pew Research, contributing to a slowdown in hiring across key industries.

Fiscal cuts and state-level strain

Trump’s “One Big Beautiful Bill,” his signature economic legislation, has shifted fiscal responsibilities to the states. Programs like Medicaid face funding challenges, and both federal and state government employment are shrinking.

US Treasury Secretary Scott Bessent acknowledged that the economy is undergoing a “detox period,” describing the downturn as a necessary transition to a leaner, more manufacturing-driven model.

But with job creation stalling, wages flat, and uncertainty growing, the promised golden age remains elusive, and the specter of a US recession looms large.

  • United States
  • Donald Trump
  • US recession
  • US economy

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