Is the Economy as Healthy as Trump Claims?

U.S.|Is the Economy as Healthy as Trump Claims?

The Federal Reserve is set to cut interest rates today. That will likely please President Trump, who has been calling for lower borrowing costs since he took office (though he wants even bigger cuts). It also gives us a clue as to how central bankers view the economy.

How do they decide how the economy is doing? They look at metrics like hiring, consumer spending and prices. And they talk to businesses and consumers across the country to detect trends that take time to show up in the official data. What they want is a labor market in which jobs are plentiful and unemployment is as low as it can be without causing prices to rise too much. They also want to ensure that inflation stays low and stable.

So just how healthy is the economy?

The case for worry

Trump says Americans are experiencing the “best economy we’ve ever had.” Experts say the economy is solid, but the labor market looks much more wobbly than it did at the start of the year. They’re worried about several issues:

• A drop-off. Job growth has slowed dramatically.

• Who’s recruiting? New positions are not spread evenly across the economy. Most of the recent gains have been concentrated in the health care sector, which in the last year has accounted for roughly a third of all job growth. That is a lot for just one industry.

• On the prowl. It’s taking people without jobs longer to find them. As of August, a quarter of the unemployed had been looking for work for more than half a year. College graduates seem to be finding it especially challenging.

The case for hope

Yet in other ways the economy is humming along. Companies are not laying off workers in droves, and people are still spending money.

• Low firings. The unemployment rate has stayed relatively stable. That gives economists hope that the slowdown across the labor market is less about a declining need for workers and more about a shrinking pool of available people at a time when Trump is cracking down on immigration.

• Consumers are still spending. According to yesterday’s data from the Commerce Department, retail sales rose sharply in August — even faster than economists had forecast. Americans are still buying things even as they say they feel glum about the economy, and even as prices rise on a wide range of goods and services as a result of tariffs. The disjunction has perplexed economists. “The resilience just continues to confound expectations,” said James Knightley, chief international economist at the investment bank ING.

• High rollers help. Wealthy households account for about half of all consumer spending, so if Americans in this group keep opening their wallets, that will help to stave off any downturn. Just this week, the stock market soared to another new high, giving them another boost.

Knightly offered one caution, though: Lower- and middle-income households are under immense strain. If they keep having to tighten their belts, he wondered: “How long can this last?”

Related: The Fed meeting has brought together a Trump ally and people who have been targets of Trump’s outrage.

• Robinson, the suspect in the Kirk killing, wrote in text messages to his romantic partner that he had “had enough” of Kirk’s “hatred” and that “some hate can’t be negotiated out,” according to prosecutors.

• Robinson’s mother recognized him in a photo released by officials. She and Robinson’s father then began to ask him questions — including if he would send a photo of his rifle. He didn’t.

• When Robinson suggested he was considering killing himself, they coaxed him back to his family home. They called a friend from the Church of Jesus Christ of Latter-day Saints, a retired deputy sheriff, and began trying to negotiate Robinson’s surrender.

• Attorney General Pam Bondi said she would target people engaging in “hate speech,” despite the First Amendment’s broad protections.

More on Assassinations

• A judge tossed out two state terrorism charges against Luigi Mangione, who is charged with killing a health care executive. Mangione still faces a second-degree murder charge.

• Minnesota held a special election to fill the seat of Melissa Hortman, the Democratic state representative who was killed in her home in June.

War in Gaza

• Thousands of Palestinians fled Gaza City yesterday as Israel bombed the area and said an expanded ground operation had begun.

• Trump has neither urged restraint nor endorsed the offensive, our colleague Michael Crowley wrote from Israel. Benjamin Netanyahu is taking his inaction as a green light to proceed.

Politics

• Speaker Mike Johnson released a bill to keep the government running past a Sept. 30 deadline, effectively daring Democrats to allow a shutdown. Top Democrats say they oppose the bill, raising the chances of a shutdown.

• The Trump administration ordered several National Park Service sites to take down materials related to slavery and Native Americans.

• Immigrant detainees are not receiving proper mental health care, lawyers and advocacy groups say, and reports of suicide attempts are persistent.

• Trump arrived in Britain for a state visit, and people protested by projecting his mug shot on the walls of Windsor Castle. In the video below, Mark Landler, our London bureau chief, explains how British leaders are trying to stay on Trump’s good side.

Other Big Stories

• Extreme heat exacerbated by climate change led to tens of thousands of excess deaths this summer in Europe, scientists said.

• Britain is expanding its use of live facial recognition, digital surveillance and internet regulation faster than almost any other Western democracy.

• Ask The Morning: Do you have questions about drones? Tell us here. We’ll answer some in a future newsletter.

TRUMP’S LAWSUIT

The president sued The New York Times on Monday for $15 billion, saying our 2024 campaign coverage had defamed him and sought to undermine his campaign. The suit cites articles that document his rise, the accusations made against him, his time on “The Apprentice” and the views of a former top general. “It lacks any legitimate legal claims and instead is an attempt to stifle and discourage independent reporting,” a spokesman for The Times said.