Over the past year, U.S. President Donald Trump has launched a number of policies that will transform business, supply chains and jobs.
However, the US economy appears to be growing steadily and the unemployment rate is in a safe zone.
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In reality, experts say, the stock market boom is helping mask deeper fundamental problems in the economy.
Since taking office, President Trump has imposed a range of tariffs on countries, including major trading partners, leading to predictions that inflation will soar, manufacturing comes to a screeching halt and unemployment soars.
None of these scenarios came true.
Inflation was above the Federal Reserve’s target, but was modest at 2.7% in December.
Last month’s unemployment rate was relatively low at 4.4%. The gross domestic product (GDP) growth rate for the third quarter of 2025 was 4.3%, the highest growth rate in two years.
“The shock and awe we expected didn’t materialize,” Bernard Jarosz, chief US economist at Oxford Economics, told Al Jazeera.
Mr. Jarosz said the limited impact may have been due to the relative lack of retaliation by other countries and the rise in stock prices immediately following the repeal of the most expensive tariffs announced by President Trump on “Emancipation Day.”
Since President Trump’s April 2 announcement, the stock market, which is heavily weighted toward the “Great Seven” tech companies, has risen nearly 30%, increasing Americans’ paper wealth and encouraging households to loosen their wallet strings.
Oxford Economics said in an October research briefing that increases in net worth have driven nearly a third of the increase in consumer spending since the coronavirus pandemic.
At the same time, profits are not evenly distributed.
Moody’s Analytics estimates that the top 10% of income earners account for about half of all spending, the highest share since authorities began compiling the data in 1989.
Marcus Noland, executive vice president at the Peterson Institute for International Economics, told Al Jazeera: “The gains are going largely to people in high-income brackets, people who have stock portfolios, and they’re going to people in sectors and professions related to AI.”
“But these numbers hide the uneven growth of this economy.”
net decrease in workers
Careful analysis of the data reveals its heterogeneity. For example, despite impressive GDP numbers, that growth has not been accompanied by an increase in employment.
While the hospitality and health care industries added workers last year, retail, manufacturing and construction, which rely heavily on immigrants, all shed jobs.
The United States experienced its first net immigration decline in at least half a century last year as a result of the Trump administration’s mass deportations of illegal immigrants and tightening of legal immigration pathways, according to an analysis by the Brookings Institution.
“And through this very public and brutal method of deportation, they are not only deterring illegal immigration, they are threatening immigrants in the United States,” Noland said, adding that the U.S. workforce is expected to lose a net 2 million people this year.
The bifurcation of the U.S. economy is being felt across the business community, with small businesses lacking deep pockets to stock up on inventory and negotiate with suppliers in the face of rising tariffs.
“This year’s heightened policy uncertainty has had a significant impact on small and medium-sized businesses,” Oxford Economics said in a November report.
These companies have also seen little benefit from the boom in the artificial intelligence (AI) industry, as their revenues come from capital-intensive chip manufacturing and cloud services.
While AI proponents believe the world has the potential to become much more productive and dramatically improve living standards, they also worry that large numbers of people will be put out of work.
“This could be the new normal: unemployment growth. That’s one of the reasons why people aren’t feeling so good,” Jarosz said.
“While there will continue to be a lot of hype about AI and its productivity benefits, we believe there is a risk to the labor market if hiring continues to be suppressed.”
