Trump’s economy shows resilience, but signs of losing steam

Eighteen months into Donald Trump's second term, the economy had taken repeated shocks without a break in the headline numbers, but the gains looked thinner to households and smaller firms still facing high prices and uneven wage growth. Jobs stayed firm enough to support the administration's case, yet investment, consumer confidence and inflation expectations showed signs of losing momentum.

The Federal Reserve's July 13, 2018 Monetary Policy Report said the economy was expanding solidly and labor market conditions remained strong. In Washington, D.C., the Board of Governors of the Federal Reserve System was still describing a labor market that could absorb pressure, even as tariff uncertainty began to cloud business planning and pricing decisions.

That uncertainty centered on Donald Trump's import tariffs. On March 13, 2018, a poll of economists found the vast majority believed the tariffs would do more harm than good to the U.S. economy. By August 23, 2018, another poll showed economists expecting growth to slow steadily in coming quarters as the trade war intensified, even after the economy had touched a four-year high.

The slowdown fears eventually caught up with the growth numbers. Revised data released July 26, 2019 showed U.S. economic growth in 2018 at 2.5%, missing the administration's 3% target by any measure. That left the White House defending a record in which expansion continued, but not at the pace Trump had promised voters.

The gap between the strong national figures and the weaker experience on the ground was most visible in prices, wages and confidence. Households kept feeling pressure from high prices, while smaller firms faced a wait-and-see climate as they weighed whether tariff-driven costs and policy volatility would squeeze margins. Even where payrolls and output remained resilient, the broader picture showed an economy still moving, but no longer carrying the same early momentum.