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On Monday we gave you a look at the kitchen table economy. We explored how it is affecting Americans. Catch up on that here.
Today we’re going one level deeper. What is driving those economic conditions and what do these broader numbers tell us about where the economy is headed?
**Growth:**The economy is growing but it’s sluggish. In the second quarter of 2026, it[grew at a 1.5% annual rate](https://www.bea.gov/data/gdp/gross-domestic-product#:~:text=GDP%20(Advance%20Estimate)%2C%202nd%20Quarter%202026&text=Real%20gross%20domestic%20product%20(GDP,of%20Economic%20Analysis%20(BEA).), down from 2.1% in the first. Consumer spending, investment, and exports contributed to growth, but a key factor constricting it is lower government spending. The U.S. economy is still expanding, but not at a typical U.S. rate, and certainly not at the 5% or 6% ratethe Trump administration promised.
Inflation: In 2025, inflation fell slightly, and in general it’s significantly down from its pandemic-era highs. But higher energy costs from the war with Iranpushed prices up, and consumer priceshit a three-year high in May. Keep in mind the Federal Reserve is trying to get inflation back to 2%. As long as inflation is above that target, the Fed is less likely to lower interest rates, which impacts borrowing and mortgages and that ripples through the economy.
**Jobs:**The unemployment rate, which hasremained above 4% for the last 18 months, tells only one part of the story. The other part is where jobs are being created and who is getting them. During Trump’s second term,about 86% of net new payroll jobs have gone to women, who nowoutnumber men in the workforce for just the third time in history. That’s largely because almost all job growth has come from industries dominated by women, like healthcare and social assistance, while male-dominated industries like manufacturing have lost jobs. That doesn’t necessarily mean women are coming out ahead.Research has founda vicious cycle: Women are more likely to accept lower-paid and lower-status jobs; as more women enter a field, pay and status can fall further. The gender split tells us something else: New jobs are emerging in a narrow set of care and service industries. At the same time, manufacturing jobs — which Trump vowed would boom –are at record lows, when measured as a share of all U.S. jobs. Also,unemployment among U.S.-born workers is upand the share of Americans participating in the workforcehas fallento its lowest level in a half-century, outside of COVID.
Manufacturing: It should not be surprising, then, that the economy has not produced the broad manufacturing revival Trump promised during the campaign. Manufacturing output as a share of GDP isnear record lows.𝕏Factoryand𝕏warehouse construction, which boomed under Biden, are now in decline.𝕏Office constructionis also falling. Data center construction, however,is at record highs. (Fun fact: The computer-related imports used in AI data centers were the largest exemption from Trump’s trade war last year. Read more about thathere.)Tariffs: Trump said he imposed tariffs to encourage companies to make more things in America,create jobs, reduce the trade deficit, and raise government revenues. Heargues theyare paid by other countries. We’ve already made clear there’s no jobs or manufacturing boom. Here’s where tariffs have made an impact: In 2025, America’strade deficit in goods hit a record high. Trade policy uncertaintyskyrocketed to unprecedented levels. Many small businesses havestruggled to absorb the rising costs and uncertaintytariffs brought. Small businesseslost jobs for 12 consecutive monthsafter Trump enacted his “Liberation Day” tariffs, and lost more jobs in 2025 as a whole than any other year since Intuit Quickbooks began reporting small business employment data in 2015.Who Wins? Tariffsraised substantial government revenue. As we explained in Part One, a lot of that cost was paid by American businesses and consumers. In recent months the administration haspaid more in tariff refunds than it has collectedfrom tariffs.
Trade Deficit: One of the clearest tests of the tariff strategy is the trade deficit, the difference between what America imports and exports. Ithit a record high in 2025, partly because companies rushed to stockpile goods before Trump imposed his tariffs, the opposite of the outcome he promised. A year later, despite U.S.exports increasing, the trade deficit isstill extremely large.
Keep reading to find out…
What contributed to the historic national debtWhy experts are worried about the bond marketHow to break down the White House’s figure for investment into the U.S.Who’s really benefitting from the stock marketKey takeaways to understand the economy
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