Trump Economic Policy

Speaking from the World Economic Forum in Davos, Commerce Secretary Howard Lutnick said the $30 trillion U.S. economy will grow at more than a 5% annualized rate in the first quarter of 2026 and reach 6% growth by year’s end, levels not seen outside post‑pandemic rebounds. He argued the surge will be driven by expected Federal Reserve interest‑rate cuts and unusually large tax refunds flowing from the GOP’s "big, beautiful bill" tax-and-spending law, and administration officials noted the Atlanta Fed’s GDPNow tool currently pegs Q4 2025 growth at 5.4%. Outside economists quoted by CBS, including Truist’s Mike Skordeles, say a one‑off 5% quarter is "possible" but maintaining that pace all year is unlikely given trade tensions from Trump’s tariffs and policy uncertainty, and most private forecasts cluster around 2–2.5% growth for 2026. Analysts also warn that juicing demand via lower rates and bigger refunds risks reigniting inflation, which is still running at 2.7% on the CPI with food up 3.1%, recalling how similar forces helped drive the 2022 price spike. Polling cited in the piece shows consumers remain unhappy with prices and want the administration to focus more on cost of living, undercutting the White House’s "roaring economy" narrative even as near‑term GDP readings look strong.

The Labor Department reported that initial claims for unemployment benefits fell by 9,000 to 198,000 for the week ending Jan. 10, 2026, well below economists’ expectations of 215,000 and signaling layoffs remain historically low. The four-week average dipped to 205,000 and continuing claims slid to 1.88 million, even as broader labor-market data show sluggish hiring and softening demand for workers. Employers added only 50,000 jobs in December and the unemployment rate edged down to 4.4%, while job openings fell to 7.1 million in November as businesses hold onto staff but hesitate to expand payrolls—a pattern economists label “low hire, low fire.” Fed Chair Jerome Powell has warned the job market may be weaker than it appears and suggested recent employment figures could ultimately be revised down enough to imply net job losses since the spring, when Trump’s latest tariff rounds hit. The Fed has already cut its benchmark rate three times in a row by a quarter point each to cushion the slowdown, and this mixed picture of steady layoffs but weak hiring will shape how far and how fast it continues easing.