The Economy

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? days of Project 2025 coincide with a cratering economy. After President Donald Trump publicly disavowed the sweeping right-wing blueprint for his second term, publicly claiming “I have nothing to do with Project 2025,” new research shows the Trump administration has implemented 28 percent of its domestic agenda. At a “First 100 Days” celebration attended by The Lever, the Heritage Foundation, which wrote the manifesto, lauded the administration’s effort to devastate the federal bureaucracy, bragging that “Washington is actually shrinking thanks to the Trump-Vance administration.”

• The authors of Project 2025 depicted their agenda as supporting “pro-growth economic policies that spur new jobs and investment, higher wages, and productivity.” But after 100 days of Project 2025, the government announced that the economy contracted for the first time in three years.

Unprecedented corporate profiteering while workers make less. Corporations are preparing to cite Trump’s trade war as justification for raising prices — just as they previously cited pandemic supply chain slowdowns to raise prices. It’s a familiar tactic: They want us to believe macroeconomic forces mean they have to fleece us. But a new Federal Reserve study notes that ever-higher prices have coincided with a sudden increase in corporate profit-taking. Those profit increases are fueled by a quest for dividend payouts to company shareholders, rather than for resources to reinvest in companies — all while employee compensation declines.

Inflated prices, inflated profits. Inflation should not automatically increase profit margins — businesses may be charging more for products, but they face higher input costs. And yet inflation has coincided with an unprecedented rise in profit margins, according to the Fed study. Whereas “profits averaged 13.9 percent of national income over the 2010-19 period,” a surge began in 2020, and by the end of 2024, corporate profits comprised more than 16 percent of national income. At the same time, employee compensation as a share of national income decreased. 

Profiteering fueled by dividend payments. The Fed finds that “76 percent of the growth in corporate profits earned by domestic nonfinancial industries was driven by an increase in the dividends rewarding shareholders” — and just 15 percent of the excess cash was devoted to “invest(ing) in longer-term investment projects.” In 2024, corporations paid a record $1.75 trillion of dividends, including $651 billion from U.S.-based companies. Dividend payments more than doubled in the last 16 years, prompted by the 2003 George W. Bush tax cuts on dividends, which mostly rewarded superrich shareholders rather than encouraging companies to reinvest. A recent example: Stellantis laid off 900 autoworkers, then announced a $2.2 billion dividend payout.

More proof that greedflation is real. During the pandemic, pundits and politicians tried to pin inflation on government spending and supply chain slowdowns. Their campaign both halted more aid to the working class and deflected blame from oligopolies that were abusing their outsized market power to jack up prices. But data from the time showed corporate profiteering drove much of the pandemic-era inflation. The new Fed study suggests the desire to pay out shareholders is behind what has come to be called “profit-led increases” in prices.

Reporting contributed by David Sirota.

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US economy shrinks 0.3% in first quarter as Trump trade wars disrupt business

The U.S. economy shrank 0.3% from January through March, the first drop in three years. It was slowed by a surge in imports as companies in the United States tried to bring in foreign goods before President Donald Trump imposed massive tariffs. Read More.

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CHART OF THE DAY

 

“Today’s college graduates are entering an economy that is relatively worse for young college grads than any month on record, going back at least four decades.” (Source: The Atlantic)

 

McDonald's store traffic falls unexpectedly as diners grow uneasy about economy

The burger giant said Thursday that its same-store sales, or sales at locations open at least a year, fell 1% globally in the January-March period. That was their worst performance since 2020. Read More.

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? McRecession vibes

Illustration: Sarah Grillo/Axios McDonald's comparable sales fell 3.6% at U.S. stores, its worst showing since the pandemic, in a sign that people are pinching pennies because of recession fears, Axios' Nathan Bomey and Kelly Tyko report. Signs of a fast-food slowdown are spreading: Starbucks saw comparable sales decline in Q1, and Domino's Pizza said customers are opting for cheaper carryout over delivery. ? Wingstop CEO Michael Skipworth flagged "a meaningful pullback in our business" in "specific pockets," including Hispanic customers and "lower middle income" consumers.

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The US economy added a stronger-than-expected 177,000 jobs in April

America’s long-resilient job market continues to defy expectations — even in the wake of swirling uncertainty.

https://www.cnn.com/2025/05/02/economy/what-to-expect-from-fridays-jobs-report?

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? Trump's economic split screen

President Trump disowned the U.S. economy as one still shaped by his predecessor's policies last week.

• Less than 48 hours later, he touted strong employment and said the administration was "just getting started!!!"

Why it matters: The economy didn't change, but the data did. The tricky presidential balance of owning the economy — in the good and bad — is not new. But it has perhaps never been more on display than with Trump, Axios' Neil Irwin and Courtenay Brown report.

• "I think the good parts are the Trump economy and the bad parts are the Biden economy because he's done a terrible job," the president said plainly in an interview with NBC's Kristen Welker on "Meet the Press" yesterday.

? What's going on:

• Trump has repeatedly called on Fed chair Jerome Powell to cut interest rates — accusing him of being "Too Late" — a move that sets the central banker up as the "fall man" should the economy weaken.
• Trump pointed the finger at Biden for the stock market's drop in recent weeks, even after taking credit for the stock market rally months earlier.

? Reality check: In normal times, Trump and his advisers would be right. The economy is a mighty tanker ship, slow to turn.

• The exception is when they take sweeping, rapid action on a massive scale. Both Biden and Trump have done that, resulting in economic data that can be directly mapped to policy choices.

State of play: Economic conditions are being shaped almost entirely by Trump, who quickly ripped up the longstanding global trade playbook, leaving businesses and consumers scrambling.

• Trump shrugged off the GDP report that showed the economy shrinking for the first time in two years in the first quarter: "That's Biden — that's not Trump," he said.

? But there's a flip-flop in the messaging when indicators suggest the economy is in good shape.

• Just 15 minutes after the release of Friday's better-than-expected jobs report, Trump said the economy was "in a transition stage" — though he bragged about the slew of good economic news under his watch.

For the record: A White House official said it's not completely Trump's economy yet, and noted that it'll take more time to pass Trump's tax bill, negotiate trade deals and deregulate the economy. "There remain lingering Bidenomics problems," the official said.

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Caution! (Fewer) men at work. A new study released in April by the San Francisco Federal Reserve Bank shows a dramatic rise in unemployment for “prime-age” men: One out of every nine men between the ages of 25 and 54 was out of work in 2023, a “critical national issue,” the economists said. In 1960, that number was one out of 35. “If prime-age men in the present day participated in the labor force at the same rate as their counterparts in 1960, there would have been around 5 million more prime-age men in the labor force in 2023,” the economists found.

Blame NAFTA? Researchers found that men without a college degree and Black men are the most likely demographics to be out of work, and most likely to lose their jobs during economic downturns. The study highlights how the rise in unemployment could be caused in part by a loss of domestic construction, manufacturing, and other working-class jobs traditionally held by non-college-educated men.

• The study’s authors noted that the decline in these jobs is in part due to “import competition and technology advancements” — read, the free trade economy. Additionally, the study found that low real wages (aka the inflation-adjusted purchasing power of the dollar) and stagnating minimum wages are also driving men out of the labor market — jobs just aren’t paying enough to keep them working.

A new Lost Generation. The economists compared workforce participation across four generations — the Silent Generation, Baby Boomers, Gen X, and Millennials — and found that roughly 14 percent of Millennials at the age of 25 were not employed, compared to 7 percent of Baby Boomers and roughly 9 percent of Gen X. College and trade schools played a role in keeping Millennials out of the workforce, but “even after accounting for schooling, younger generations of prime-age men have higher nonparticipation rates than earlier generations do.” 

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Less farmland is going for organic crops as costs and other issues take root

An increasing number of American farmers are turning away from growing organic. America’s certified organic acreage fell almost 11% between 2019 and 2021. Read More.     ? Workers' growing anxiety   Data: Glassdoor. Chart: Axios Visuals Workers are anxious: The share of people talking about uncertainty on the workplace review site Glassdoor is up 80% since last year, Axios' Emily Peck reports. Glassdoor's employee confidence index, which measures how positive workers are feeling about their employer's business outlook, is hovering at a record low. Other surveys are finding similar results. ? Why it matters: The unemployment rate has remained fairly low, but the labor market slowdown and rising concerns over a recession are shaking workers' feelings of job security.

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? Boom job: Digital creator

Data: IAB and principal investigator John Deighton, professor emeritus, Harvard Business School. Table: Axios Visuals The number of people with full-time equivalent jobs as digital creators in the U.S. jumped from 200,000 in 2020 to 1.5 million in 2024, Axios' Kerry Flynn and Sara Fischer report. Why it matters: Creators — or influencers — are now the largest and fastest-growing segment of the 28.4 million internet-dependent jobs in the U.S. By the numbers: The study, from the Interactive Advertising Bureau and written in conjunction with Harvard Business School professor emeritus John Deighton, found creator jobs have grown 7.5x since 2020. Creator media revenue is growing five times the rate of the traditional media sector, the researchers found. The big picture: The internet-supported economy of $4.9 trillion accounts for 18% of U.S. GDP and is the leading driver of growth. Keep reading.

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The Private Equity Time Bomb Is About To Blow. Private equity firms spent the last two decades plundering beloved American brands for parts — now, they threaten to send the economy further into a tailspin with record-high bankruptcies.

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? Charted: Foreign worker slowdown

Data: Indeed. Chart: Axios Visuals The share of international job seekers looking to work in the U.S. has declined sharply this year, Axios' Emily Peck writes from an Indeed report out today. Why it matters: The labor market is slowing down, and stricter immigration policy — beginning with the Biden administration and accelerating under President Trump — is further cooling demand for American jobs. By the numbers: Clicks from job seekers outside the U.S. started climbing in mid-2021 as the job market boomed in the pandemic recovery. The international clicks peaked in August 2023, at 2.4% of all postings, and declined to 1.7% by March 2025.

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Inflation slowed more than expected in April, despite tariff-related price pressures building

US inflation slowed to its lowest rate in more than four years, an unexpected and welcome development at a time when President Donald Trump’s dramatically escalated tariffs are expected to cause prices to rise.

https://www.cnn.com/2025/05/13/economy/us-cpi-consumer-inflation-april?

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Moody’s strips U.S. government of top credit rating, citing Washington’s failure to rein in debt

WASHINGTON (AP) — Moody’s Ratings stripped the U.S. government of its top credit rating Friday, citing successive governments’ failure to stop a rising tide of debt.

https://apnews.com/article/moodys-debt-government-us-rating-credit-e2c803cade9b1552b68c7e722eac3b78?

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Target sales drop in 1st quarter and retailer warns they will slip for all of 2025

Target announced on Wednesday that sales fell more than expected in the first quarter, and the retailer warned they will slip for all of 2025 year as its customers, worried over the impact of tariffs and the economy, pull back on spending. Target also said customer boycotts did some damage during the latest quarter. Read More.

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? America's moving middle class

Illustration: Annelise Capossela/Axios

The upper bound of "middle class" in America is often pegged at an annual income of between $150,000 and $250,000 — but looking at legislation being drawn up by Republicans in Congress, it seems to be much, much higher, Axios' Felix Salmon writes. The "big, beautiful bill" that the House passed yesterday would allow state and local tax deductions of as much as $40,000 for people making up to $500,000 — a sign that some blue-state Republicans consider $500,000 to be a middle-class income. President Trump considers an annual income of $1 million too modest to justify higher income taxes, but is fine with the idea once household income reaches $2.5 million. ? Where it stands: To be in the top 10% of individual earners, a U.S. worker has to earn $150,000 per year, according to the Bureau of Labor Statistics. To be in the top 10% of households, you had to earn $235,000.

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The economic implications of tariff rate volatility

Changing U.S. trade policy is driving swings across global markets. But it’s not just a higher-rate regime that’s driving investor fears; it’s the lack of certainty around where those rates will land in the long-term. Read the latest insights on trade from Goldman Sachs economists and analysts.

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Recession risks

President Donald Trump’s tariffs — those he has threatened and those he has already enacted — have led some experts to predict that the US economy could enter a recession while also seeing inflation rise. Here’s what it means for consumers.

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US inflation gauge cools with little sign of tariff impact, so far

WASHINGTON (AP) — A key U.S. inflation gauge slowed last month as President Donald Trump’s tariffs have yet to noticeably push up prices. Spending by Americans slowed despite rising incomes, potentially an early reaction to higher prices on some imported goods.

https://apnews.com/article/inflation-spending-economy-b96e94fc971045c2a50e642fa85d4397?

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? Good news can't catch a break

Photo illustration: Aïda Amer/Axios. Photo: Mandel Ngan/AFP via Getty Images

America is so far defying the gloomiest economic forecasts, but tariff threats keep scrambling the good news, Axios' Courtenay Brown reports. Why it matters: Inflation is at a four-year low, consumer sentiment might be on the mend and the stock market has recovered from its post- "Liberation Day" lows — but it's all being overshadowed by intensifying China trade tensions. ? State of play: President Trump signaled Friday that the U.S.-China trade truce, a deal that effectively reopened trade between the world's two largest economies earlier in May, might be in danger. Economists don't expect price pressures to seep into the data until the summer months. Retailers are rolling through inventory stockpiled before the worst of the tariffs took effect. But consumers are tying their economic fortunes to trade — and nothing else. "Despite the many headlines about the tax and spending bill that is moving through Congress, the bill does not appear to be salient to consumers at this time," the University of Michigan said in a release. ? What to watch: So far, Trump's trade drama has played out against a largely favorable economic backdrop. But there are early signs the backdrop might be shifting. Consumers pulled back on spending last month, choosing to sock away their income, rather than buy things. Separate data this past week showed the most recurring unemployment filings since November 2021, an indication that jobs are getting harder to find.

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CHART OF THE DAY

 

A heist 50 years in the making. (Source: Economic Policy Institute)

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U.S. imports see largest plunge on record in April

U.S. goods imports plummeted in April, per data out Thursday, as President Trump's tariff policies rocked the global trade system.

https://www.axios.com/2025/06/05/trump-tariffs-imports?

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? Retail's anti-tariff weapon

Illustration: Sarah Grillo/Axios

Retailers are supercharging their store brands to boost sales and keep prices low in the face of rising tariff pressures, Axios' Kelly Tyko writes. Why it matters: The popularity of private-label products could soar as tariffs threaten to drive national brand prices higher. Store brands aren't immune to tariffs, but large retailers have better leverage to negotiate terms with suppliers and reduce production costs. Retailers have been diversifying where their private brand products are manufactured and pushing for more American-made products. Zoom in: A poster child for the private brand is discount grocer Aldi. Scott Patton, the chain's chief commercial officer, told Axios just 4% of its assortment "is impacted by tariffs." Walmart CEO Doug McMillon told Axios that the retailer has more "visibility and control over what happens" with store brands. Costco has been adding new products to its Kirkland Signature brand and seeing those sales outpace the company's overall numbers. Keep reading.

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Employers add a solid 139,000 jobs in May, though hiring slows as some potential weaknesses appear

WASHINGTON (AP) — U.S. employers slowed hiring last month, but still added a solid 139,000 jobs amid uncertainty over President Donald Trump’s trade wars.

https://apnews.com/article/jobs-unemployment-trump-tariffs-economy-fdd4d1075b2b4490993a863ccb6950c1?

? Jobs report's soft underbelly

Illustration: Aïda Amer/Axios

Today's jobs report looked fine on the surface, but underneath there are signs of a weakening labor market, Axios' Courtenay Brown and Neil Irwin write. The U.S. added 139,000 jobs in May, roughly in line with what forecasters had anticipated. ? But the Labor Department revised down job gains in March and April by a combined 95,000 jobs. And the unemployment rate is low in part because there's a growing number of people who aren't in the labor force at all — neither working nor looking for work. Go deeper.

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Inflation rose less than expected last month despite Trump’s tariffs

Inflation rose less than expected in May, a month when the effects of higher tariffs were starting to become more widespread.

https://www.cnn.com/2025/06/11/economy/us-consumer-price-index-may?

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Unemployment among young college graduates outpaces overall US joblessness rate

Young people graduating from college this spring and summer are facing one of the toughest job markets in more than a decade. The unemployment rate for degree holders ages 22 to 27 has reached its highest level in a dozen years, excluding the coronavirus pandemic. Read More.