U.S. labor market is much weaker than previously thought, a Bureau of Labor Statistics (BLS) report revealed. U.S. employers added 73,000 jobs in July, far fewer than the 104,000 that economists expected. More alarmingly, the report suggested that job growth was markedly weaker in May and June than the government had previously believed. The BLS always revises its estimates of monthly employment gains, once more data becomes available. Usually, these updates do not fundamentally change the labor market outlook. This time, they did.

US. GDP officially grew at a 3 percent annual rate in the second quarter, after decreasing by 0.5 percent in the first quarter. But both of those figures are misleading. This is because Trump’s trade policies have greatly exacerbated well-known flaws in the government’s approach to calculating GDP. The reasons for this are a bit complex, but the upshot is that the government likely underestimated growth in the first quarter and overestimated it in the second, due to massive, tariff-induced swings in US imports.

U.S. GDP growth is highly imbalanced: An explosion in AI infrastructure spending is playing an outsize part in sustaining our economic expansion. Over the past six months, the artificial intelligence buildout has contributed more to American economic growth than all of consumer spending … Should anything cause America’s tech companies to pull back on data center construction, the US economy could quickly sputter.

Even as growth slackens, consumer prices in June were 2.6 percent higher than they had been one year earlier, according to Commerce Department data released last week. Core prices (without food and energy) in June were 2.8 percent higher than 12 months earlier. Both of these rates were higher than they had been in May. And the underlying data strongly indicates that Trump’s tariffs are largely responsible for inflation’s resurgence.

Many sectors are already responding to rising import costs by shedding payroll. If that trend continues, and unemployment rate [that remains relatively low at 4.2%] rises, consumer spending (that were up 0.1% adjusted for inflation in June) will likely dip. Faced with less demand, more employers will need to lay off staff, which would further erode spending. A recessionary spiral could ensue.