Seven months into President Donald Trump’s second term, new analyses from government agencies and independent economic experts show mixed results from his administration’s economic policies, especially regarding inflation, employment, and the housing market.
California’s housing market illustrates these challenges. According to the California Association of Realtors, new home sales in the Western region dropped 8.4 percent in June, with builder confidence below the neutral threshold for the 15th straight month. Housing inventory has risen to its highest level since September 2007. Meanwhile, 38 percent of builders have reduced prices—the highest rate since 2022.
Despite significant tariffs and tax cuts under the “One Big Beautiful Bill Act,” inflation rose to 2.7 percent annually as of June, up from 2.4 percent in May, based on Bureau of Labor Statistics data. This increase comes as Federal Reserve Chair Jerome Powell, appointed by President Trump, maintained interest rates at 4.25 to 4.50 percent, citing ongoing uncertainty around trade policy.
“There are many uncertainties left to resolve,” Powell noted after the Federal Open Market Committee voted 9-2 to hold rates steady for the fifth consecutive meeting. “It doesn’t feel like we are very close to the end of that process.”
According to Penn Wharton Budget Model forecasts, the administration’s tariffs could reduce long-run GDP by about 6 percent and wages by 5 percent, with middle-income households potentially losing $22,000 over their lifetimes. The model suggests these impacts are twice those of a corporate tax hike from 21 to 36 percent.
The Congressional Budget Office estimates that tariffs implemented from January to May could reduce federal deficits by $3 trillion, though at a significant economic cost. Yale Budget Lab reports the overall effective tariff rate is now 18.2 percent, up from 2.4 percent earlier this year.
Job growth remains modest—about 147,000 jobs were added in June, and unemployment held at 4.1 percent. Federal employment fell by 69,000 since January, while discouraged workers grew by 256,000 to 637,000 in June.
A recent U.S.-EU framework averted a trade war but requires Europe to accept 15 percent tariffs. The deal is expected to raise consumer prices by 1.8 percent short-term and slightly reduce GDP growth.
As Trump publicly criticizes the Fed for not cutting rates, Powell underscores the central bank’s independence and prioritizes controlling inflation. Policymakers continue to monitor the changing landscape as America shifts toward protectionist trade policies.
Continued observation and new data will be crucial for evaluating long-term effects.
