MAGAnomics Isn't Working

"Even as he subjected the economy, a colossus that generates more than thirty trillion dollars' worth of goods and services annually, to a one-two-three punch of high tariffs (which raise prices), immigration restrictions (which reduce the labor supply), and DOGE-led job cuts in the federal government, things seemed, until recently, to be moving slowly ahead and defying the direst predictions about the consequences of MAGA nomics."

"The G.D.P. growth rate turned negative during the first three months of this year, but that was largely a by-product of American households and businesses rushing to import more stuff before the tariffs went into effect. (G.D.P. measures domestic production of goods and services; imports don't count and they make the growth rate appear weaker.) Spurred partly by corporate investments in A.I., over-all spending and job creation looked to be holding up,"

An initial observation compares U.S. economic momentum to a massive freighter that moves slowly and resists quick course changes. Recent policy shifts—high tariffs, immigration restrictions, and federal job cuts—are exerting downward pressure by raising prices and reducing labor supply. A first-quarter G.D.P. decline reflected households and businesses accelerating imports before tariffs took effect, which depresses measured domestic output. Corporate investments in A.I. supported spending and job creation, contributing to a reported three percent annualized second-quarter rebound. Despite the G.D.P. rebound and White House optimism, a sharp slowdown in job growth from May through July signals risk of an economic stall.

Read at The New Yorker