Trump Is Now Running the Worst Economy Since His Last Term in Office

In mid-2025, the economy under President Trump has taken a dramatic turn for the worse. A steady trickle of grim data has prompted economists to warn that U.S. job growth and other indicators are at their weakest levels in decades. Recent Labor Department reports show that new hiring has collapsed – the three-month average for nonfarm payrolls is only about 35,000 jobs, a pace not seen since 2010 (aside from the pandemic). Even accounting for a modest 73,000 gain in July, analysts note this is the poorest three-month run outside COVID-era lockdowns since the Great Recession. Alongside modest wage growth and rising prices, these trends have reignited fears of an incoming recession. In this light, many observers quip that Trump is presiding over “the worst economy since his last term in office” – a harsh turnaround from the growth enjoyed earlier in his presidency.

Key Economic Indicators

• Jobs: U.S. payrolls expanded by only about 73,000 in July 2025, after huge downward revisions in May and June (which together were trimmed by roughly 258,000 jobs). On average, job growth has been just ~35,000 per month over May–July, the weakest three-month labor-market performance since 2010. Health care and social assistance accounted for nearly all of the recent gains, while sectors like manufacturing, retail, warehousing and professional services shed jobs. Without the healthcare sector’s contribution, the nation would have seen outright payroll losses in recent months.

• Unemployment: The official jobless rate ticked up to 4.2% in July 2025 (around 4.25% when unrounded). That is higher than during late 2024 and early 2025, and well above the 3.5% low Trump boasted of in early 2020. Even before the latest downturn, the labor market had already been “paying a price” for immigration crackdowns and tariff uncertainty, with discouraged workers leaving the labor force.

• Inflation: Consumer prices are still running above the Fed’s comfort zone. In June 2025 the CPI index was up 2.7% year-over-year (CPI rose 0.3% from May to June). Notably, analysts observe that import tariffs are beginning to raise costs. Reuters reports that inflation “increased in June as tariffs on imports started raising the cost of some goods.” Several Federal Reserve officials worry that these duties are “starting to boost inflation,” potentially ushering in the kind of high-price, low-growth stagflation last seen in the 1970s.

• GDP Growth: The Commerce Department reported a 3.0% annualized gain in Q2 2025 (after a -0.5% decline in Q1). However, economists stress that this rebound is deceptive. Most of the improvement came from a plunge in imports, not a surge in domestic demand. Consumer spending grew just 1.4% and private investment faltered, the slowest pace in years. With trade and inventory swings removed, underlying growth is barely above 1%. As one forecaster put it, the economy “was purring along” before but has now “been placed on hold” by policy missteps.

• Trade and Tariffs: President Trump has significantly escalated his trade war, imposing some of the steepest import levies in decades. Recently he slapped 35% duties on many goods from Canada, among other hikes. Reuters notes that even after negotiating some deals, the U.S. effective tariff rate is now at a level “highest since the 1930s.” These barriers raise costs for American businesses and consumers and fuel inflation. Trump’s own economic advisers admit that uncertainty around trade policy has frozen hiring – as Navy Federal’s Heather Long observed, companies are “not [wanting] to hire or invest with this much uncertainty about tariffs, inflation, etc.”

Labor Market Slide: From Boom to Bust

Just a few years ago, Mr. Trump touted surging jobs and record-low unemployment as proof of economic success. By early 2020, unemployment had fallen to 3.5%, the lowest since 1969. Now the picture is reversed. The latest BLS data reveal widespread weakness: aside from health care, nearly every major industry is shedding workers. The Economic Policy Institute reports that the labor market is “much weaker than originally reported,” as May and June payrolls were slashed by 258,000. CNN noted that July 2025 produced the weakest job growth since December 2020 – literally the last month of Trump’s previous term. Over the whole May–July span, America has seen its feeblest hiring quarter since the last days of 2020. These facts have even forced Trump’s own advisers to scramble for excuses. On national TV, White House economist Stephen Miran cited “seasonal adjustment quirks” and demographic changes to deflect criticism, but most analysts point squarely at Trump’s tariffs and policy uncertainty as the culprits.

The irony is stark. In Trump’s first term, job openings exceeded workers for years and companies struggled to fill positions. Now, hiring has stalled and layoffs are rising. The unemployment rate has drifted up toward 4.3% once participation effects are counted. Wage growth has begun to slow as well, even as inflation remains elevated. In short, the labor market no longer looks like a “booming” engine; instead, it resembles an economy running on fumes.

Tariffs, Inflation, and the Fed

Mr. Trump’s aggressive trade strategy is also stoking inflation. Economists have warned that the many new import duties are feeding higher prices. Indeed, recent reports show U.S. inflation turned higher in June, largely due to recent tariff increases. By June the headline CPI was up 2.7% from a year earlier – above the Federal Reserve’s 2% goal. The White House’s trade penalties have real bite: as Reuters notes, import tariffs are “starting to boost inflation,” raising the specter of stagflation in the months ahead.

This dynamic has put the Fed in a bind. Until now, the central bank has kept its benchmark rate at 4.25–4.50% despite Trump’s calls for cuts. Two Fed governors (Christopher Waller and Michelle Bowman) recently dissented on holding rates steady, arguing that the tariffs’ impact on prices will be temporary and that labor-market weakness should prompt an earlier rate cut. Others have pushed back, noting that inflation remains above target. Chairman Jerome Powell himself has highlighted the economy’s “solid” fundamentals even as he acknowledges the new risks. Meanwhile, President Trump has openly lashed out at the Fed – dubbing Powell a “disaster” – and even ordered the firing of the Bureau of Labor Statistics commissioner after the disappointing jobs report.

The overall message is clear: markets and policymakers are now painfully aware that Trump’s trade fights and fiscal deficits have real inflationary side effects. For example, Treasury yields fell and stocks swooned after the July data, as investors grappled with the combined threat of slowing growth and rising prices. Economists at RSM US have bluntly dubbed the situation “stagflation,” warning that the economy is “paying a price” for these policies.

Growth Stagnates

In tandem with the labor strains, overall growth has come off the boil. The Commerce Department’s “advance” GDP report for Q2 (released July 30, 2025) showed a 3.0% annualized gain, but with an important caveat: almost all of that rebound came from a dramatic drop in imports. In reality, domestic demand is anemic. Consumer spending (the core driver of growth) expanded only 1.4% in Q2, and business capital investment slowed sharply. Residential construction and sales actually contracted again. As Reuters summed it up, the quarter’s headline “overstated the economy’s health” since it was driven by a swing in trade flows.

In other words, the U.S. was barely growing on its own steam. TS Lombard economist Freya Beamish said bluntly: “The picture is not pretty, an own goal by U.S. policymakers.” The economy had been “purring along” but has now been “placed on hold,” she noted. Even Federal Reserve forecasts have been downgraded: economists now expect full-year growth of only ~1.5%, down from ~2.8% in 2024 and below the Fed’s estimated 1.8% non-inflationary pace. In short, aside from the pandemic era, nothing in recent memory looks as concerning as the current downturn in late 2025.

Comparing to Trump’s First Term

For context, it’s worth remembering how Trump’s economy fared in 2017–2020. Fact-checkers note that real GDP did briefly hit about 3.0% in 2018 – the fastest since 2005. By early 2020, unemployment had fallen to roughly 3.5%. However, even then some structural issues persisted: federal deficits ballooned and trade imbalances grew. When Trump left office in January 2021, the pandemic had hit, wiping out many gains. The net effect was that his administration ended with about 2.7 million fewer jobs than when it started, and unemployment back up at 6.4%.

In contrast, the current downturn has arrived without a global pandemic. Instead it appears driven by policy choices. Today’s employment, growth and inflation figures are worse than they were even in early 2021 under Trump’s first administration. That is a striking reversal. It underscores that the only time America saw such poor job numbers (outside COVID) was during the 2008 crisis – not under a normal recovery. To date, nothing in the new data suggests a strong economy; rather, they echo the deepest lulls of the past two decades.

Outlook

In summary, President Trump’s renewed tenure is unfolding amid palpable economic unease. Key indicators – from jobs to GDP to prices – are flashing red. The trade wars and budget deficits that were once touted as strength points now appear to be dragging growth down. With inflation still above target and the Fed already at historically tight rates, the traditional tools for jump-starting growth are limited. Unless there are swift policy changes, these trends suggest the U.S. may be headed for a prolonged period of stagnation and slowdown.

These sobering facts stand in stark contrast to the “booming” economy Trump often promised. His administration’s rhetoric of prosperity is being tested against the reality of stalled hiring and sagging output. For now, at least, the economy under Trump’s watch is as weak – if not weaker – than any time since his own presidency’s lows. How this will play out politically remains to be seen, but the data leave little doubt: the American economy is in deep trouble, and its troubles are occurring squarely on the president’s watch.