The final week of July 2025 is not a policy moment. It’s a collision of pressure points. The Federal Reserve is expected to hold interest rates at 4.25% to 4.5% for the fifth straight meeting. The decision lands Wednesday at 2 p.m. ET. Trump’s push for cuts has intensified, with direct pressure on Powell and public threats. Governors Waller and Bowman are both expected to dissent. That kind of double break hasn’t happened since 1993. The Fed’s hesitation is rooted in inflation, tariff uncertainty, and a labor market that’s softening but not collapsing.
Rate cut odds: 4% now, 63% in September
FactSet shows just 4% chance of a cut this week CME FedWatch puts September cut odds at 63% Powell: “We would have cut by now if not for tariffs”
Inflation: Tariffs pushing prices up
June CPI: 2.7%, up from 2.4% in May Core PCE also rose in June Fed’s year-end inflation forecast: 3.0% Powell warns: “Tariff-driven price hikes are starting to rear their ugly head”
GDP: Rebound looks thin
Q1 2025: –0.5% contraction Q2 estimate: +1.8%, driven by inventory drawdowns and trade deficit narrowing Consumer spending projected to rise just 1.5%, weakest back-to-back quarters since early 2020
Labor market: Quiet cooling
June unemployment: 4.1% July forecast: 4.2% Private payrolls expected to add 100,000 jobs, lowest since 2023 Fed projects 4.5% unemployment by year-end
🇺🇸June #JOLTS: Frozen & weakening labor market
🔻Job openings: 7.4mn (-275k): near post-Covid low
🔻Hiring: 5.2mn (-261k): near post-Covid low
🔻Quits: 3.1mn (-128k): near post-Covid low
⬇️Layoff: 1.6mn (-7k): no surge pic.twitter.com/gUXoVsnnHU
— Gregory Daco (@GregDaco) July 29, 2025
Consumer behavior: Christmas in July, panic in August
21% of Americans already started holiday shopping, up from 16% last year Retailers stretching summer sales: Amazon’s Prime Day ran 4 days, Macy’s launched “Black Friday in July” CivicScience survey shows early shopping driven by tariff fears and supply chain anxiety Moms shifting timelines: 65% started shopping before August TJX, Target, and Kohl’s all reported higher July traffic in high-income zip codes.
⚠️Uh-oh: Consumers’ assessment of current job availability weakened in July
❌7th consecutive decline
❌Lowest since March 2021 & 2017 before that⛔️Notably, 18.9% of consumers indicated that jobs were hard to get in July, up from 14.5% in January pic.twitter.com/1j7Gl14fWN
— Gregory Daco (@GregDaco) July 29, 2025
Debt stress: Top earners falling behind
Delinquencies among households earning $150,000+ jumped nearly 20% over 2 years In high-income zip codes, late credit card payments doubled compared to low-income areas Subprime auto loan delinquencies hit 6.6% in January, highest since tracking began Student loan delinquencies surged to 7.7% in Q1 2025 New York Fed survey shows job-switch confidence among $100K+ earners dropped below 52%.
Retail sales: Up, but not strong
June retail sales rose 0.6%, driven by price hikes not volume Furniture and auto categories showed year-over-year gains Discretionary sectors remain weak Consumers shifting to cash and delaying purchases.
Housing: Locked in, spending out
Mortgage rates remain above 7% Refinancing stalled Homeowners delaying purchases Spending shifting to essentials.
What’s next: Tariff deadline Friday
Trump’s pause on sweeping tariffs expires Friday New rates expected for over 200 countries, ranging from 10% to 20% Trade framework with China still unresolved Deadline looms August 12 Court of Appeals hearing Thursday on legality of Trump’s emergency tariff powers.
https://www.cbsnews.com/news/federal-reserve-powell-trump-fomc-interest-rate-meeting-july-30
https://finance.yahoo.com/news/survey-reveals-consumer-yuletide-anxiety-150000065.html
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