Few economists expect he Federal Reserve to cut the federal funds interest rate this week at the upcoming FOMC meeting. Most expect the Fed cut will occur at the September meeting. However, those assumptions are being reconsidered. The possibility of no Fed rate cuts this year is now on the plate for analysis. Recent survey of economists puts the odds of a September cut at 100%. The one thing I know is, if 100% of economists agree on something, bet against it.

Harsh tariff talks prompts some to expect an economic downturn. Unfortunately, this may all be the calm before the storm. Prospects of tariffs will disrupt an already fragile economic growth path. Other factors weighing against near-term growth include a weakened dollar, aggressive illegal immigration control, pauses in funding on government contracts, and looming increases in federal debt.

Regardless of political preference or tariffs, shifting immigration policies stand to have a strong impact on the labor market conditions facing the construction industry as well as hospitality and agriculture. This can increase the shortage of construction workers, projects initiated, pricing, and market economics overall.

Immigration and tariffs may make the cost of building a new home even more expensive – worsening the near-term affordability difficulties facing home buyers. First-time homeowners are currently at the lowest level ever.

The Federal Reserve Dual Mandate is to maintain stable inflation and low unemployment. Unfortunately, today’s economy is characterized by both increases in inflation and unemployment. Stagflation is when economic growth turns negative. Raising rates too fast could result in recession. Lowering them too quickly could result in inflation. Fed policy can address one – not both.

Even prior to tariff talks, evidence suggested that the economy was drifting to a slower growth path. Job growth has slowed. Economic uncertainty rising among consumers and businesses with many struggling to keep up with inflation. Defaults on credit cards, student loans, and mortgages are rising. This all paints a picture of a slowdown.

Recent evidence suggests the U.S. economy may be drifting toward a slower growth path - becoming fragile. While job numbers can be volatile, job growth is slowing and trend toward further weakening. There are signs consumer is struggling under the weight of inflation.