Recently, the U.S. government’s record-breaking shutdown was temporarily resolved after an agreement was reached in the Senate, bringing an end to the immediate threat of a government closure. However, another major issue is now emerging. According to research from ANBOUND, it is now becoming clear that the U.S. economy is facing significant challenges.

ANBOUND’s founder Kung Chan noted that the U.S. economy is under triple pressure. First, there is the impact of tariff policies, which are affecting businesses, especially small and medium-sized enterprises. These businesses are struggling to tackle the market situation, which causes them to adopt a wait-and-see approach when the prices of some imported goods have indeed risen. Second, the high interest rates are causing major issues. The current interest rates in the U.S. are having the most impact on the real estate and automobile markets. For example, the effective interest rate on real estate loans has now exceeded 6%, while car loan rates typically range from 4% to 9%. Since home and car purchases are some of the largest drivers of consumer spending in the U.S., these high rates are having a substantial impact on the economy. Third, the influence of AI and technological changes is also a significant factor. The rapid transformation driven by AI has led to an unprecedented wave of unemployment within the middle class, with many suddenly finding themselves without jobs.

Chan warned that the U.S. economy is facing significant problems, and the situation may be even more severe than the Trump administration is willing to admit. This is likely to become a major issue in the near future. As the world’s largest market, if the U.S. economy falls into distress, it will have far-reaching implications, not only for Trump’s policies, the Republican Party’s political future, and the country’s tariff strategies, but also for global geopolitical dynamics. If mishandled, the Republican Party could find itself losing the presidency in the future, as the economic crisis may become a point of attack for its political opponents.

Due to the government shutdown, a number of official statistics have been delayed in their release. However, based on non-official data, the situation looks far from optimistic. According to the surveys of consumers released by the University of Michigan in November, the preliminary value has dropped to 52.3, down from the final value of 58.6 in October, and significantly lower than the final value of 63.9 in November of last year.

Based on information tracking and research, it is clear that the U.S. economy is teetering on the edge of stalling, with one of the most direct indicators being a stagnation in corporate hiring, a key measure of economic health. Small and medium-sized enterprises (SMEs) are crucial economic engines in local communities across the U.S., employing over 40% of the nation's workforce. Compared to large corporations, SMEs are more vulnerable to financial shocks. For nearly 30 years, a consulting firm based in North Carolina had never laid off any employees. However, by August, the company's director began calling some of her most valued clients, informing them of an opportunity to hire one of Metiss Group’s "superstar" office managers. This manager had worked for the company for 14 years and was one of three employees ultimately let go.

Moreover, many small businesses have adopted similar defensive measures. The clients of the aforementioned consulting firm, most of which have fewer than 250 employees, are also cutting costs and halting hiring. Recent surveys indicate that small businesses are uncertain about their financial prospects. Due to the government shutdown, the U.S. government has not released the latest employment reports, but other analyses suggest that the trend of layoffs is continuing. The U.S. Bank Institute’s small business alternative hiring indicator showed a 7% drop in September compared to the 2024 average, with a similar decline observed in July. Data from payroll processing company ADP revealed that in October, small businesses, i.e., those with fewer than 500 employees, had already laid off 31,000 workers.

In addition, large companies are also engaging in mass layoffs, influenced by the increasing use of AI. According to data from U.S. employment consulting agencies, over 153,000 layoffs were announced in October alone, a 175% increase from the same period last year, marking the highest level for the month in over two decades. Challenger estimates that the total number of layoffs announced so far this year has reached around 1.1 million. Among the companies making significant cuts are Amazon, which has laid off approximately 14,000 workers, UPS, which is eliminating 48,000 positions, and other major companies like Microsoft, Chegg, and Starbucks, which have each issued multiple rounds of layoff announcements. For instance, after Amazon launched its warehouse AI scheduling project, Project Amelia, the number of logistics managers was reduced by 41%. Salesforce, following the deployment of its Einstein Copilot, saw a 51% reduction in customer service teams performing the same workload. Similarly, after JPMorgan Chase implemented the large model Suite, the demand for junior analysts dropped by 80%.

It is also worth noting that the unemployment rate among white-collar workers in the U.S. has reached a historic high. According to the latest data from the U.S. Bureau of Labor Statistics, individuals with a four-year college degree now account for a record 25% of the total unemployed population. This means that more than 1.9 million workers with a bachelor’s degree or higher are currently unemployed, the highest proportion since records began in 1992. At the same time, the unemployment rate for those with a college degree or higher rose to 2.8% in September, up 0.5 percentage points from the same period last year. In contrast, the unemployment rate for individuals with lower levels of education remained stable or showed only minimal growth, indicating that the white-collar job market is experiencing a significant slowdown.

This sense of uncertainty among U.S. business owners is also reflected in the country's consumers. A widely followed preliminary survey from the University of Michigan recently revealed that the U.S. consumer confidence index for November has dropped to near a historical low of 50.3. This is down from the final value of 53.6 in October, and significantly lower than the final value of 71.8 in November of last year, as well as below the market expectation of 53.2. For many business owners, this means that numerous potential customers are cutting back on non-essential spending that drives sales.

David Lokker, the co-owner of Landsharks, an outdoor apparel retailer located in Saugatuck, Michigan, has begun proactively reaching out to employees, offering to "work in place of them" to save on labor costs. Lokker stated that the company’s revenue has dropped by about 3% this year, and 2025 is likely to be the second year of revenue decline since the company was founded by his mother more than three decades ago. The only other time this happened was in 2009, during the Great Recession. Meanwhile, Paloma, a women’s clothing and accessories boutique in Portland, Oregon, with a 50-year history, has also been feeling the effects of economic uncertainty. One of the store’s owners, Mike Roche, shared that sales have declined since the beginning of the year. Many of his customers are expressing concern about the future direction of the country, reflecting broader anxieties in the consumer base.

Other U.S. businesses are feeling the impact of trade policies, particularly those that have led to rising prices for imported goods. The most significant change came in August, when the loophole that had allowed imports valued below USD 800 to be exempt from tariffs was eliminated. The current tariffs, combined with new duties on a range of imports including automotive parts, metals, and other goods, have squeezed the margins of some companies that produce products for U.S. consumers. These increased costs are putting additional pressure on businesses, making it more challenging for them to maintain profitability while trying to keep prices affordable for consumers.

Maxant Metals, based in Moore Haven, Florida, imports aluminum from Ecuador, Brazil, and other countries, which is then transported to the company's 10,000-square-foot steel structure plant in central Florida. There, the metals are processed into various parts, including brackets, fasteners, screen room components, awning parts, and metal sheets for ATVs produced by Honda and Kawasaki. David Reed, the company’s owner, had hoped to hire an additional employee and start a new department to produce three-inch-thick aluminum plates for carports and roofing. However, the new tariffs on imported aluminum this year have eaten into his profits, and the new machines he purchased from China also carry additional tariffs. While Reed has kept his staff numbers stable and recently hired a part-time worker to fill a vacancy, the overall increase in tariffs has meant that he has had to take on more work personally, and opportunities to expand the business have diminished. Reed mentioned that he has reached out to his congressional representatives to see if any measures can be taken to ease the tariff burden, but so far, his efforts have been in vain.

Many attribute the current economic difficulties in the U.S. to Donald Trump, but a deeper look suggests that the Federal Reserve, particularly under Chairman Jerome Powell, may bear an even more significant, albeit less visible, responsibility. Powell's steadfast refusal to lower interest rates, driven by partisan politics, has kept the cost of capital high, dampening consumer spending and weighing down the economy. This is one of the crucial factors behind the economic slowdown. To say that the Fed has severely damaged the U.S. economy is not an exaggeration.

Data shows that in September, the U.S. Consumer Price Index (CPI) rose 3.0% year-over-year, the highest since January 2025, while the core CPI increased 0.2% month-over-month, with the annual inflation rate holding steady at 3%. Market forecasts expect a 0.2% month-over-month increase in October CPI. With rising costs, inflation climbing, and unemployment rates on the rise, these are all clear signs pointing toward a bleak economic outlook.

The Trump administration and the Republican Party may not yet fully recognize the severity of the U.S. economic issues, or they might be aware but are unable to publicly acknowledge it. Regardless, there is still a noticeable divergence in predictions and assessments. ANBOUND's forecast suggests that Trump will likely find himself scrambling to explain why the U.S. economy is in trouble. Emergency remedial measures, such as direct cash transfers to residents using tariff revenues to spur consumption, are also possible. Furthermore, Trump may point the finger at Powell, using the Fed chairman as a scapegoat. However, as of now, none of these actions have been taken, which indicates that neither Trump nor the Republican Party has fully recognized how close the U.S. economy is to the brink of serious danger.

Final Analysis Conclusion:

Whether looking at the significant decline in macroeconomic indicators, stagnation in corporate hiring, plummeting consumer confidence, rising prices, or other key factors, there is no doubt that the U.S. economy is facing serious challenges. These problems primarily stem from a combination of factors, including tariff policies, high interest rates, and the ongoing transformation driven by AI. However, both Trump and the Republican Party seem to have yet to fully grasp the gravity of the economic situation. This oversight will likely have significant repercussions not just for Trump and the Republicans, but also for U.S. tariff policies and global geopolitical dynamics. The longer this economic malaise goes unaddressed, the greater the potential for long-term negative effects on both the U.S. and international fronts.