The US economy is showing new signs of weakness, with fresh data revealing higher unemployment, slowing growth, and persistent inflation. Federal Reserve Chairman Jerome Powell has warned of a “tricky situation facing policy makers” as the threat of “stagflation”—the combination of rising costs for workers alongside slowing profits and investment—comes into sharper focus.
Unemployment Increasing
In early September, even after the firing of the Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer and the planned installation of a Trump loyalist, official revisions to economic data revealed that the economy added one million fewer jobs between 2024 and early 2025 than previously reported. This exposes how fragile the so-called “labor market” is, once touted by both parties as proof of economic strength. Despite attempts to bend statistics in their favor, the reality is difficult to conceal: since January, job growth has been weaker than at any point since 2010, the year after the ruling class eliminated 17 million jobs in the “Great Recession.”
August’s jobs report showed only 22,000 new jobs—well below expectations—and the unemployment rate ticked up to 4.3%. Manufacturing activity has now declined for six straight months, with 12,000 jobs lost in that sector and 15,000 in the public sector in August alone. Job losses have hit Black workers especially hard, with unemployment climbing from 7.2% to 7.5%.
Trump had claimed tariffs would revive industry and that cutting federal jobs would redirect workers into factories and workshops. But tariffs have instead aggravated the crisis further, raising the cost of imports, squeezing profits, and slowing production. Growth that appeared in early 2025—when firms rushed to import before tariffs kicked in—has now collapsed. The Federal Reserve projects GDP growth of only 1.6% this year, compared to 2.4% in 2024.
source: BEA; BLS; Haver Analytics; and IMF staff estimates
Inflation Persists
Consumer prices rose 2.9% in August compared to a year ago, outpacing the Fed’s 2% target. Rent jumped 4.1%, averaging $1,307 per month for tenants, while homeowners faced median payments of $2,035. Food prices increased 0.5% in a single month and 2.7% year-over-year, with staples like meat, fish, and eggs up as much as 4.6%. Utility costs surged—electricity by 6.2% and natural gas by 13.8%—partly driven by the explosion in construction of energy-hungry AI data centers, themselves forming a speculative bubble likely to burst and intensify the broader crisis.
These increases are not caused by rising demand but by slowing production and rising costs of essentials like utilities and insurance. In real estate, there are more sellers than buyers, yet prices have not dropped. Monopoly firms in real estate and banking have propped up inflated prices to protect their portfolios, using “concessions” to force sellers into expensive repairs or refinancings rather than allow actual price reductions.
Both Republicans and Democrats have rejected price controls in spite of price gouging, with Trump dismissing them as “socialism” and Democrats largely conceding “nothing can be done.” Agencies like the Federal Trade Commission have been sidelined from investigating price gouging, leaving workers to pay the cost.
The Role of the Federal Reserve
The Federal Reserve arose during US capitalism’s monopoly stage, when industrial and banking capital merged into finance capital. Its purpose is to stabilize the financial system in the interests of the wealthiest capitalists—managing credit, resolving contradictions between banks and industry, and intervening to save this parasitic class when needed.
Today its “dual mandate” is to keep unemployment low by easing credit and to keep inflation low by tightening credit—effectively restructuring the production system as needed according to the whims of monopoly capital to better extract enormous profits. Trump has sought to break the Fed’s supposed independence, pressuring it to slash interest rates from 4% to 1% in a bid to delay the crisis. He has attacked Powell personally for resisting his demands, calling him a “stubborn mule.”
The converging realities of rising unemployment, persistent inflation, and slowing growth confirm what revolutionaries have long argued: US imperialism cannot escape crisis, no matter how it manipulates statistics or leans on the Fed. Even as the sole hegemonic imperialist superpower, it is plagued by contradictions that no administration—Republican or Democrat—can resolve.
As VND-Peru has explained, the task of recent US governments has been to pull imperialism out of its crisis. This task is doomed, because monopoly capital, both state and private, only deepens the contradictions and reactionary character of the system.
Image: Federal Reserve chair Jerome Powell with President Donald Trump in July during a tour of the Federal Reserve in Washington, DC.
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