Opinion: Why America will go through a job recession, not an inflation one

The U.S. economy is currently in a very precarious situation, with more and more consumers feeling unconfident with the state of the economy, and analysts growing in fear of the impact of tariffs on various aspects of the nation. Indeed, the inflationary aspect of tariffs should not go unnoticed, as according to July and August CPI, PPI, and PCE reports, prices are rising at a gradually higher rate, and above the Federal Reserve's target of 2% for inflation.

A "HELP NOT WANTED" sign, Morgan DeVries/KX News.

Instead, the U.S. will suffer a job recession, not an inflation one. But why would I believe such if inflation is on the rise, and tariffs remain steep on many imports?

Well, companies are currently dealing with price hikes quite strongly; Many large companies such as Walmart have pledged to hold their prices steady to provide relief to consumers who are on the edge with prices. And although prices are indeed rising unfortunately, these increases are marginal and are not the steep increases we've seen with job losses in recent months.

But, what is happening is mass layoffs. From manufacturing to federal government jobs, thousands of individuals have either been laid off or denied opportunity to work as a result of the destructive nature of high tariffs, and budget cuts in the government. However, the advent of artificial intelligence in the economy cannot go understated, as they have gradually replaced jobs across all sectors of the industry. This is why the post-graduate unemployment rate keeps surging despite more people than ever acquiring college degrees.

Quantitatively, the U.S. economy lost almost a million jobs between April 2024 and March 2025 following a revision by the Bureau of Labor Statistics, and in August jobs only rose modestly with unemployment kicking up and over 10,000 manufacturing jobs being lost. This trend is expected to continue as tariffs remain in place, inflation is rising, and interest rates remain high, preventing companies from borrowing.

This looming jobs recession has increase optimism for an interest rate cut this month, with betting odds for a 25 or even 50 basis point cut surging in recent weeks. A rate cut could help stop the bleeding in the labor market is carried out effectively enough, and following up with more small rate cuts afterward.

If you're feeling concerned about finding a professional career in 2025, you're not wrong. In fact, more Americans than ever feel the exact same, and unless we enact significant economic and fiscal policy changes, this trend would only exacerbate.