The US economy is experiencing a noticeable slowdown in mid -2025, with poor growth in domestic demand, muted work benefits and new tariff activities ready to affect both inflation and overall economic dynamics, according to a recent analysis of Global UBS research.
The weekly note of the US economy from the Swiss bank noted that real GDP increased to an annual rate of just 1.2% in the first half of 2025, a significant step down at a firmer pace recorded in 2023 and early 2024. quarters.
Demand of labor responds to Natura. Nonfarm’s monthly salary growth slowed sharply, with July increasing by only 73,000 jobs – well below expectations and accompanied by significant downward audits for previous months. The quarterly average of work profit is now only 35,000 a month, the rate described as “stand speed” by Federal Reserve Vice President Michel Bauman and Governor Chris Waller. (And Bauman and Waller are Prominent names floated to replace the fed chair Jererom PowellTrump’s White House has extensively criticized.) The unemployment rate reached 4.25%, the highest level of 2021, and the widest measure of insufficient use of labor, known as U-6, is also in trend at a higher than a percentage above-candidate.
Key, the Pingle team revealed participation in the workforce rather than sudden immigration or shock to the population, is behind the weaker growth of the workforce. “The decline in the labor rate was masked by how much the reduction was taking place,” the report claims, noting that more demographic groups, including black Americans and teenagers, show greater unemployment and participation in falling.
Population growth, as recorded by household research, is maintained stable near the level of previous years – assembles claims that stricter immigration significantly limits the labor market. UBS notes that this is contrary to Omeerom Powell’s statements: “Despite Chair Powell’s saying at a press conference” After the FOMC “that slowing immigration slows down the growth of the population and thus the growth of labor, this is not what is happening in real data. The household and exploration survey of the establishment looks more like the labor market more as the labor market is more like the labor market more like the labor market more like the labor market, such as lowering the labor market, as well as the household survey itself, estimates that the population itself is not entertaining.
The average work week remains subdued, sitting at 34.25 hours in July – at the 2019 level and far from “stretching” typically when labor markets are tight due to lack of workers. Industry -specific data show that job losses are not concentrated in sectors with large immigration workers, which further supports the view that Slack comes from weakened demand, not from limiting supply.
Tariffs set to climb, threatening further traction
Tariff policy, after a series of negotiations and executive activities, is well on its way to becoming even more restrictive. The new package of reciprocal tariffs, including a 35% rate of Canadian imports (with the exception of goods in accordance with USMCA) and board increases affecting nearly 70 countries, are expected to raise the average tariff rate of 1% in the US at around 16%. UBS estimates that this will take 0.1 to 0.2 percentage points from growth next year.
The sectoral carvers persist, but with the EU now facing a 15% tariff for most US exports than the originally proposed, yet significant growth-BS expects direct pressure on car prices, semiconductors, pharmaceuticals and more. Presidential slap proposals of 200% tariff for pharmaceuticals remain in discussion, but they will have huge implications if implemented.
Reducing the horizon rate
With evidence increasing that both the growth and the labor market are softening and that tariffs can further increase the basic inflation of 2.8% at the moment by as much as 3.4% by the end of the year, pressure is being built for the federal reserve to facilitate monetary policy. While the Jererom Powell chair maintained a possible rate reduction in the table in September, he offered some directions forward, saying that the total data totaled data would dictate the next move. The UBS maintained its expectation that the Federal Open Market Committee would reduce the rates by 25 basic points in September and even 100 basic points before the end of 2025.
After all, the bank revealed that the US economy entered a clear slowdown as it was 2025, with the disappearance of domestic intensity, cooling work and shadow of higher tariffs is likely to reduce perspectives. UBS researchers argue that the data show a slowdown in demand, not the supply of supply and that the Fed is likely to act soon to mitigate the landing.
For this story, Wealth Used generative AI to help in the initial draft. The editor has confirmed the accuracy of the information before the publication.
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