Unemployment

The agency made the announcement as it confronts staffing shortages caused by air traffic controllers who are working unpaid.

The United States Federal Aviation Administration (FAA) will reduce air traffic by 10 percent across 40 “high-volume” markets beginning Friday morning to maintain safety during the ongoing government shutdown, it has said.

The agency made the announcement on Wednesday as it confronts staffing shortages caused by air traffic controllers, who are working unpaid, with some calling out of work during the shutdown, resulting in delays across the country.

FAA Administrator Bryan Bedford said the agency is not going to wait for a problem to act, saying the shutdown is causing staffing pressures and “we can’t ignore it”.

Bedford and Transportation Secretary Sean Duffy said they will meet later Wednesday with airline leaders to figure out how to safely implement the reduction.

Widespread delays

The shutdown, now in its 36th day, has forced 13,000 air traffic controllers and 50,000 Transportation Security Administration officers to work without pay. This has worsened staff shortages, caused widespread flight delays and extended lines at airport security screening.

The move is aimed at taking pressure off air traffic controllers. The FAA also warned that it could add more flight restrictions after Friday if further air traffic issues emerge.

Duffy had warned on Tuesday that if the federal government shutdown continued another week, it could lead to “mass chaos” and force him to close some of the national airspace to air traffic, a drastic move that could upend American aviation.

Airlines have repeatedly urged an end to the shutdown, citing aviation safety risks.

Shares of major airlines, including United Airlines and American Airlines, were down about 1 percent in extended trading.

An airline industry group estimated that more than 3.2 million passengers have been affected by flight delays or cancellations due to rising air traffic controller absences since the shutdown began on October 1. Airlines have been raising concerns with lawmakers about the impact on operations.

Airlines said the shutdown has not significantly affected their business, but have warned bookings could drop if it drags on. More than 2,100 flights were delayed on Wednesday.

On Tuesday, FAA’s Bedford said that 20 percent to 40 percent of controllers at the agency’s 30 largest airports were failing to show up for work.

The federal government has mostly closed as Republicans and Democrats are locked in a standoff in Congress over a funding bill. Democrats have insisted they would not approve a plan that does not extend health insurance subsidies, while Republicans have rejected that.

There is no end in sight to the United States government shutdown.

At least 1.4 million workers are going without pay, while some people on federal aid are worrying about how they will get their next meal.

How can the standoff between Republicans and Democrats be resolved, and what will happen if it goes on?

Presenter: 

Adrian Finighan

Guests: 

Marena Lin – Co-founder of Project Restore Us, a volunteer-led organisation that supports communities facing food insecurity in Los Angeles

Niall Stanage – White House columnist for The Hill newspaper and digital media company in Washington, DC

Chris Tilly – Economist and professor at the University of California, Los Angeles

The United States Federal Reserve has cut its benchmark interest rate by 25 basis points to 3.75 – 4.00 percent, amid signs of a slowing labour market and continued pressure on consumer prices.

The cut, announced on Wednesday, marks the US central bank’s second rate cut this year.

“Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated,” the Fed said in a statement.

“Uncertainty about the economic outlook remains elevated.”

The cuts were largely in line with expectations. Earlier on Wednesday, CME Fed Watch — which tracks the likelihood of rate cuts — said there was a 97.8 percent probability of rate cuts.

After the September cut, economists had largely been expecting two additional rate cuts for the rest of this year. Goldman Sachs, Citigroup, HSBC, and Morgan Stanley, among others, forecast one more 25-basis-point reduction by year’s end following Wednesday’s cut. Bank of America Global Research is the only major firm that is not anticipating another 25-basis-point cut in 2025.

“The Fed has a challenging line to walk; lower interest rates to support labour markets and growth, or raise them to tamp down inflation. For now, they are taking a cautious approach tilted a bit towards the growth concerns,” Michael Klein, professor of international economic affairs at The Fletcher School at Tufts University in Massachusetts, told Al Jazeera.

Despite forecasts, Federal reserve chairman Jerome Powell isn’t necessarily inevitable.

“We haven’t made a decision about December,” Powell told reporters in a press conference.

“We remain well-positioned to respond in a timely way to potential economic developments.”

Government shutdown implications

The cuts come as economic data becomes increasingly scarce amid the ongoing government shutdown, now in its 29th day as of Wednesday, making it the second-longest in US history, behind the 35-day shutdown during the first presidency of Donald Trump in late 2018 and early 2019.

Because of the shutdown, the Department of Labor did not release the September jobs report, which was scheduled for October 3. The only major government economic data released this month was the Consumer Price Index (CPI), which tracks the cost of goods and services and is a key measure of inflation. The CPI rose 0.3 percent in September on a month-over-month basis to an inflation rate of 3 percent.

That data was released because the Social Security Administration required it to calculate cost-of-living adjustments for 2026. As a result, Social Security beneficiaries will receive a 2.8 percent increase in payments compared to 2025.

The shutdown, however, could have a bigger impact on next month’s central bank decision as the Labor Department is currently unable to compile the data needed for its November reports.

However, amid the limited government data, private trackers are showing a slowdown.

“We are not going to be able to have the detailed feel of things, but I think if there were a significant or material change in the economy one way or another, I think we would pick that up,” Powell said.

Consumer confidence lags

Consumer confidence fell to a six-month low, according to The Conference Board’s report that was released on Tuesday.

The data showed that lower-income earners – those making less than $75,000 a year – are less confident about the economy as fears of job scarcity loom. This comes only days after several large corporations announced waves of layoffs.

On Wednesday, Paramount cut 2,000 people from its workforce. On Tuesday, Amazon cut 14,000 corporate jobs. Last week, big box retailer Target cut 1,800 jobs. This, as furloughs and layoffs weigh on government workers. The US government is the nation’s largest employer.

Those making more than $200,000 annually remain fairly confident and are leading consumer spending that is keeping the economy afloat, according to The Conference Board.

Pressures both on consumer spending and the labour market are largely driven by tariffs weighing on consumers and businesses.

US markets are ticking up on the rate cut. The Nasdaq is up 0.5, the S&P 500 is up 0.1, and the Dow Jones Industrial Average is up by 0.26 as of 2pm in New York (18:00 GMT).

More air traffic controllers are calling in sick, often to work another job to pay for groceries and medicines.

United States air traffic controllers will miss their paycheques because of the ongoing government shutdown, raising concerns that mounting financial stress could take a toll on the already understaffed employees who guide thousands of flights each day.

Paycheques were due on Tuesday.

Flight delays are becoming more common across the country as more controllers call out sick because the Federal Aviation Administration (FAA) was already so short on controllers before the shutdown.

Transportation Secretary Sean Duffy and National Air Traffic Controllers Association President Nick Daniels have continued to emphasise the pressure that controllers are feeling. They say the problems are likely to only get worse the longer the shutdown continues.

Not only are controllers worrying about how to pay for their mortgages and groceries, but Daniels said some of them are also grappling with how to pay for the medicine needed to keep their children alive.

Duffy said he heard from one controller who had to tell his daughter she couldn’t join the travelling volleyball team she had earned a spot on because he couldn’t afford the cost during the shutdown.

“Air traffic controllers have to have 100 percent of focus 100 percent of the time,” Daniels said Tuesday at a news conference alongside Duffy at LaGuardia Airport in New York City. “And I’m watching air traffic controllers going to work. I’m getting the stories. They’re worried about paying for medicine for their daughter. I got a message from a controller that said, ‘I’m running out of money. And if she doesn’t get the medicine she needs, she dies. That’s the end.’”

The FAA restricts the number of flights landing and taking off at an airport anytime there is a shortage of controllers to ensure safety. Most of the time, that has meant delays — sometimes hours long — at airports like New Jersey’s Newark Liberty International Airport or Burbank Airport in California. But over the weekend, Los Angeles International Airport actually had to stop all flights for nearly two hours.

Controllers are planning to assemble outside at least 17 airports nationwide on Tuesday to hand out leaflets urging an end to the shutdown as soon as possible.

Money worries

The number of controllers calling in sick has increased during the shutdown – both because of their frustration with the situation and because controllers need the time off to work second jobs instead of continuing to work six days a week, as many of them routinely do. Duffy has said that controllers could be fired if they abuse their sick time, but the vast majority of them have continued to show up for work every day.

Air traffic controller Joe Segretto, who works at a regional radar facility that directs planes in and out of airports in the New York area, said morale is suffering as controllers worry more about money.

“The pressure is real,” Segretto said. “We have people trying to keep these planes safe. We have trainees — who are trying to learn a new job that is very fast-paced, very stressful, very complex — now having to worry about how they’re going to pay bills.”

Duffy said the shutdown is also making it harder for the government to reduce the longstanding shortage of about 3,000 controllers. He said that some students have dropped out of the air traffic controller academy in Oklahoma City, and younger controllers who are still training to do the job might abandon the career because they can’t afford to go without pay.

“This shutdown is making it harder for me to accomplish those goals,” Duffy said.

The longer the 27-day shutdown continues, the more pressure will continue to build on the US Congress to reach an agreement to reopen the government. During the 35-day shutdown in President Donald Trump’s first term, the disruptions to flights across the country contributed to the end of that disruption. But so far, Democrats and Republicans have shown little sign of reaching a deal to fund the government.

A federal judge said the layoffs by the administration of US President Donald Trump seem politically motivated and ‘you can’t do that in a nation of laws’.

A United States federal judge in California has ordered President Donald Trump’s administration to halt mass layoffs during a partial government shutdown while she considers claims by unions that the job cuts are illegal.

During a hearing in San Francisco on Wednesday, US District Judge Susan Illston granted a request by two unions to block layoffs at more than 30 agencies pending further litigation.

Her ruling came shortly after White House Budget Director Russell Vought said on “The Charlie Kirk Show” that more than 10,000 federal workers could lose their jobs because of the shutdown, which entered its 15th day on Wednesday.

Illston at the hearing cited a series of public statements by Trump and Vought that she said showed explicit political motivations for the layoffs, such as Trump saying that cuts would target “Democrat agencies”.

“You can’t do that in a nation of laws. And we have laws here, and the things that are being articulated here are not within the law,” said Illston, an appointee of Democratic former President Bill Clinton, adding that the cuts were being carried out without much thought.

“It’s very much ready, fire, aim on most of these programs, and it has a human cost,” she said. “It’s a human cost that cannot be tolerated.”

Illston said she agreed with the unions that the administration was unlawfully using the lapse in government funding that began October 1 to carry out its agenda of downsizing the federal government.

A US Department of Justice lawyer, Elizabeth Hedges, said she was not prepared to address Illston’s concerns about the legality of the layoffs. She instead argued that the unions must bring their claims to a federal labour board before going to court.

‘Won’t negotiate’

The judge’s decision came after federal agencies on Friday started issuing layoff notices aimed at reducing the size of the federal government. The layoff notices are part of an effort by Trump’s Republican administration to exert more pressure on Democratic lawmakers as the government shutdown continues.

Democratic lawmakers are demanding that any deal to reopen the federal government address their healthcare demands. Republican House Speaker Mike Johnson predicted the shutdown may become the longest in history, saying he “won’t negotiate” with Democrats until they hit pause on those demands and reopen.

Democrats have demanded that healthcare subsidies, first put in place in 2021 and extended a year later, be extended again. They also want any government funding bill to reverse the Medicaid cuts in Trump’s big tax breaks and spending cuts bill that was passed earlier this year.

About 4,100 workers at eight agencies have been notified that they are being laid off so far, according to a Tuesday court filing by the administration.

The Trump administration has been paying the military and pursuing its crackdown on immigration while slashing jobs in health and education, including in special education and after-school programmes. Trump said programmes favoured by Democrats are being targeted and “they’re never going to come back, in many cases.”

The American Federation of Government Employees and American Federation of State, County, and Municipal Employees claim that implementing layoffs is not an essential service that can be performed during a lapse in government funding, and that the shutdown does not justify mass job cuts because most federal workers have been furloughed without pay.

Stellantis announced a $13bn investment in the US, which will see production of the Jeep Compass move to the US from Canada.

Canada has threatened legal action against carmaker Stellantis NV over what Ottawa says is the company’s unacceptable plan to shift production of one model to a United States plant.

On Wednesday, Minister of Industry Melanie Joly sent a letter to Stellantis CEO Antonio Filosa noting that the company had agreed to maintain its Canadian presence in exchange for substantial financial support.

“Anything short of fulfilling that commitment will be considered a default under our agreement,” she said. If Stellantis did not live up to its commitment, Canada would “exercise all options, including legal”, she said.

Stellantis announced a $13bn investment in the US on Tuesday, a move that it said would bring five new models to the market. As part of the plan, production of the Jeep Compass will move to the US state of Illinois from a facility in Brampton in the Canadian province of Ontario.

A copy of the letter was made available to the Reuters news agency. The existence of the letter was first reported by Bloomberg.

Stellantis had paused retooling of the Brampton plant in February, shortly after US President Donald Trump announced tariffs against Canadian goods, upending the highly integrated North American auto industry.

In a statement on Tuesday night, Canada’s Prime Minister Mark Carney said Ottawa had made clear it expected Stellantis to fulfil the undertakings it had made to the workers at the plant.

“We are working with the company to develop the right measures to protect Stellantis employees,” he said.

Ontario is Canada’s industrial heartland and accounts for about 40 percent of its national gross domestic product (GDP).

“I have spoken with Stellantis to stress my disappointment with their decision,” Ontario Premier Doug Ford said on social media on Wednesday.

Stellantis spokesperson LouAnn Gosselin said the company was investing in Canada and noted plans to add a third shift to a plant in Windsor, Ontario.

“Canada is very important to us. We have plans for Brampton and will share them upon further discussions with the Canadian government,” she said in an emailed statement.

US President Donald Trump blames Democrats for looming federal layoffs as shutdown enters fifth day.

The White House has warned that mass layoffs of federal workers could begin if US President Donald Trump concludes that negotiations with congressional Democrats to end a partial government shutdown have reached a dead end.

As the shutdown entered its fifth day on Sunday, White House National Economic Council Director Kevin Hassett told CNN’s programme State of the Union that he believed there was still a chance Democrats would yield and avoid what could become a costly political and economic crisis.

“President Trump and Russ Vought are lining things up and getting ready to act if they have to, but hoping that they don’t,” Hassett said, referring to the White House budget director. “If the president decides that the negotiations are absolutely going nowhere, then there will start to be layoffs.”

Trump, speaking to reporters on Sunday, described the potential job cuts as “Democrat layoffs”, saying, “Anybody laid off, that’s because of the Democrats.”

Talks remain frozen

There have been no meaningful negotiations since Trump last met congressional leaders, with the impasse beginning on October 1 — the start of the federal fiscal year — after Senate Democrats rejected a short-term funding bill to keep government agencies open through November 21.

“They’ve refused to talk with us,” Senate Democratic leader Chuck Schumer told the CBS programme Face the Nation, insisting that only renewed talks between Trump and congressional leaders could end the standoff.

Democrats are demanding a permanent extension of enhanced premium tax credits under the Affordable Care Act (ACA) and assurances that the White House will not unilaterally cut spending agreed to in any deal.

Senate Majority Leader John Thune said he was open to addressing the Democrats’ concerns, but urged them to first back reopening the government. “It’s open up the government or else,” Thune told Fox News. “That’s really the choice that’s in front of them right now.”

Trump said Republicans were also willing to discuss healthcare reform. “We want to fix it so it works. Obamacare has been a disaster for the people, so we want to have it fixed so it works,” Trump said.

No deal in sight

Rank-and-file senators from both parties have held informal talks on healthcare and spending to break the deadlock, but progress has been minimal. “At this point, no,” Democratic Senator Ruben Gallego told CNN when asked if lawmakers were closer to a deal.

The Senate is set to vote again on Monday on competing funding bills — one backed by the Republican-controlled House and one proposed by Democrats — though neither is expected to win the 60 votes required to advance.

According to the Congressional Budget Office, nearly 750,000 federal employees face being furloughed as long as the shutdown continues, with total lost compensation estimated at $400m per day. While federal workers are guaranteed back pay under the 2019 Government Employee Fair Treatment Act, payments will only resume once the shutdown ends.

The lawsuit claims Trump does not have the authority to override the law that created the H-1B visa programme.

A coalition of unions, employers and religious groups has filed a lawsuit seeking to block United States President Donald Trump’s bid to impose a $100,000 fee on new H-1B visas for high-skilled foreign workers.

The lawsuit filed in federal court in San Francisco on Friday is the first to challenge Trump’s proclamation issued last month announcing the fee.

The United Auto Workers union, American Association of University Professors and other plaintiffs say Trump’s power to restrict the entry of certain foreign nationals does not allow him to override the law that created the H-1B visa programme.

The programme allows US employers to hire foreign workers in speciality fields, and technology companies in particular rely heavily on workers who receive H-1B visas.

Critics of H-1Bs and other work visa programmes say they are often used to replace American workers with cheaper foreign labour. But business groups and major companies have said H-1Bs are a critical means to address a shortage of qualified American workers.

Employers who sponsor H-1B workers currently typically pay between $2,000 and $5,000 in fees, depending on the size of the company and other factors.

Trump’s order bars new H-1B recipients from entering the US unless the employer sponsoring their visa has made an additional $100,000 payment. The administration has said the order does not apply to people who already hold H-1B visas or those who submitted applications before September 21.

Trump in his unprecedented order invoked his power under federal immigration law to restrict the entry of certain foreign nationals that would be detrimental to the interests of the US.

He said that high numbers of lower-wage workers in the H-1B programme have undercut its integrity and that the programme threatens national security, including by discouraging Americans from pursuing careers in science and technology. He said the “large-scale replacement of American workers” through the H-1B programme threatens the country’s economic and national security.

‘Pay to play’

The plaintiffs argue that Trump has no authority to alter a comprehensive statutory scheme governing the visa programme and cannot, under the US Constitution, unilaterally impose fees, taxes or other mechanisms to generate revenue for the US, saying that power is reserved for Congress.

“The Proclamation transforms the H-1B program into one where employers must either ‘pay to play’ or seek a ‘national interest’ exemption, which will be doled out at the discretion of the Secretary of Homeland Security, a system that opens the door to selective enforcement and corruption,” the lawsuit said.

The groups argue that agencies, including the US Department of Homeland Security’s US Citizenship and Immigration Services and US Department of State, likewise adopted new policies to implement Trump’s proclamation without following necessary rulemaking processes, and without considering how “extorting exorbitant fees will stifle innovation”.

The H-1B programme offers 65,000 visas annually to employers bringing in temporary foreign workers in specialised fields, with another 20,000 visas for workers with advanced degrees. The visas are approved for a period of three to six years.

India was by far the largest beneficiary of H-1B visas last year, accounting for 71 percent of approved visas, while China was a distant second at 11.7 percent, according to government data.

The U.S. economy will be hampered by the Trump administration’s tariffs in the coming months, which along with interest rate cuts could lead to a “stagflation-lite” scenario of modestly elevated inflation and unemployment, according to the UCLA Anderson Forecast released Wednesday.

The fourth-quarter estimate also predicts that rising layoffs could lead to a recession, and if President Trump is successful in exerting more control over the Federal Reserve, a “full blown stagflation scenario becomes a more significant risk.”

“This forecast is being produced at a time when more extreme scenarios have become increasingly plausible, even though they do not yet represent our baseline outlook,” states the report by Clement Bohr, senior economist at the forecast.

UCLA’s report notes that the labor market “deteriorated notably” in June while inflation pivoted away from a path of “gradual normalization” onto a rising trajectory.

The quarterly forecast does not take into account the government shutdown that began Wednesday that could results in thousands of layoffs, but predicts third-quarter GDP growth will come in at just 1% on a seasonably adjusted basis, and it will weaken further as the full cost of the tariffs takes hold.

It expects growth to recover in the middle of next year and reach 2% by the fourth quarter, remaining there throughout 2027.

Driving the stagflation prediction is an effective tariff rate of about 11%, with the risk of future levies on pharmaceuticals and the potential lack of a resolution of the China trade dispute. The report notes the political pressure on Federal Reserve Chairman Jerome Powell and the decision by the bank to cut the federal funds rate by a quarter point in September. UCLA predicts a similar rate cut this month.

Trump’s “big beautiful” budget reconciliation bill passed in July, which included $703 billion in temporary tax cuts over the next four years starting in 2026, also will provide substantial stimulus. The Consumer Price Index is expected to peak at 3.6% in the first quarter of next year before easing.

However, the economy will be held back by a tightening labor supply caused by retiring baby boomers and restrictive immigration policies. The unemployment rate has crept up to 4.3% and is expected to peak at 4.6% early next year.

Also Wednesday, closely watched ADP Research released figures showed private-sector payrolls decreased by 32,000 in September with job growth slowing across many industries.

The billions of dollars being invested in artificial intelligence by large technology firms has helped prop up the economy, the forecast noted, which should result in productivity gains — but the capital expenditures should tail off as a “trough of disillusionment” sets in when revenue gains don’t meet expectations.

The report also expects consumer consumption to weaken following a surge in electric-vehicle purchases in the third quarter due to the expiration of federal tax credits last month.

Mark Zandi, chief economist at Moody’s Analytics, said if the government shutdown lasts a week or two it won’t have a “meaningful economic impact.” However, if it lasts for a month or more and is accompanied by mass federal layoffs, it would have a profound effect on the economy, Zandi said.

“It would wreak havoc on the financial markets as global markets and investors begin to wonder if we can govern ourselves,” he said. “That would mean higher interest rates and lower stock prices.”

The United States government is set to shut down unless Congress passes an appropriations bill to fund its operations.

Without this legislation, federal agencies will be forced to suspend nonessential activities starting on Wednesday at 12:01am in Washington, DC (04:01 GMT).

Although Republicans control the House of Representatives, Senate and White House, they cannot pass the bill on their own. While Republicans have 53 of the 100 seats in the Senate, 60 votes are needed to advance the bill to a vote.

Republicans have proposed a short-term spending plan, but Democrats have been trying to use the approaching shutdown as leverage. They are pushing to reverse Medicaid cuts included in tax legislation passed in July and extend tax credits for healthcare purchased through government exchanges.

With neither side willing to compromise, a shutdown could have ripple effects across the US economy.

Layoffs and impact on consumer sentiment

The federal government is the nation’s largest employer. In a memo last week, federal agencies were told to prepare layoff notices for programmes that would run out of funds by the deadline and for those not considered a priority by the administration. The memo itself did not explicitly make it clear what those priorities are.

The White House did not respond to Al Jazeera’s request for clarification.

The cuts would be through what is called Reduction In Force, or RIF. But it is unclear whether the cuts, even if the president were to push them through, would last because Trump doesn’t have the power to carry them out, said Daniel Hornung, policy fellow at the Stanford Institute of Economic Policy Research.

“There’s no legal authority that you [the White House] get from shutting down to do RIFs,” Hornung  told Al Jazeera.

RIFs require 30- to 60-days notice if an agency looks to make cuts, so Hornung expected that any cuts made now would be challenged in court.

But even if the job cuts are blocked, it is not clear when that would happen. As a result, those out of work may put off purchases, especially for big-ticket items, according to Michael Klein, professor of international economic affairs at Tufts University in Massachusetts.

“Consumers will start spending less because they’re concerned about what the future looks like,” Klein told Al Jazeera.

“It might be decided [by the court] that it’s not lawful, but that could be a long time. Even if it all gets resolved, those out of a job probably aren’t going to be spending like they otherwise would.”

The memo did not provide a specific number of jobs that could be cut. It comes as more than 150,000 workers are also expected to leave the federal workforce after accepting buyouts this year. Those reductions – as part of the deferred exit programme, which kept workers on payrolls until the end of September – are the largest federal worker job cuts in almost 80 years.

In addition to the permanent layoffs, government workers face furloughs as long as the government is shut down. Workers considered not essential to government operations would stop working until Congress passes budget bills or a stopgap measure.

Delayed jobs report

On Tuesday, the Jobs Openings and Labor Turnover Survey, or JOLTS, released by the Department of Labor showed that hiring declined by 114,000 jobs to 5.1 million in August while job openings increased slightly by 19,000 to 7.2 million. If the government shuts down, the Labor Department would delay the release of key economic reports that gauge the health of the US economy.

On Thursday, it is scheduled to publish weekly jobless claims and on Friday the monthly jobs report, detailing how many jobs were created, in which sectors and the unemployment rate. Normally, the department releases that report on the first Friday of each month unless a holiday intervenes.

The broader labour market has already shown signs of cooling in recent months. In August, the US economy, the largest in the world, added only 22,000 jobs.

Softening labour conditions were one reason the Federal Reserve cut interest rates by 25 basis points in September. A delay in new data could leave the central bank with less information to consider as it weighs whether to cut rates again. Still, a short delay is unlikely to have a major effect because the Fed’s next two-day policy meeting is not until October 28-29.

Hornung believes this shutdown is coming during a fairly unique economic situation that the central bank will need to watch.

“The main risk is that we’re in a precarious spot in the economy anyway. Unlike the prior shutdowns like the prolonged 2018 shutdown, the economy was performing well, the prolonged 2013 shutdown, the economy, was in the midst of a slow but long, gradual recovery,” Hornung said.

“Now the labour market has really weakened. It appears in recent months the risk of inflation remains because of the tariffs. And so, it’s kind of this question of how much can the economy withstand.”

Market impact

Historically, shutdowns have had limited impact on financial markets because investors typically recognise that a shutdown is short-lived.

“Typically in shutdown scenarios, there’s not much impact on either equity markets or in bond markets, mostly because investors tend to look through shutdowns and assess that any temporary slowdown associated with the shutdown will be reversed when the government opens back up,”  Hornung added.

This time, the dynamics are different as the government is planning to slash jobs vs just putting employees on furlough, and this is set against Trump’s broader economic agenda focused on tariffs, which have already pressured businesses.

Markets were relatively flat before the looming shutdown. As of 3:30pm in New York (19:30 GMT), the Dow Jones Industrial Average was up 0.08 percent, the Nasdaq was up 0.06 percent and the S&P 500 was up 0.2 percent.

BREAKINGBREAKING,

The central bank’s cut comes amid a cooling labour market, which has stalled economic growth.

The United States Federal Reserve will cut interest rates by a quarter of a percentage point, so they will now be between 4.00 percent and 4.25 percent, as a slowing labour market stalls economic growth.

The Fed, the US central bank, announced its decision on Wednesday afternoon.

Economists had widely expected a 25 basis point cut, with CME FedWatch — a group that tracks probability of monetary policy decisions — putting the odds at 96 percent. One basis point is one-hundredth of one percentage point.

Before Wednesday, the Fed had last cut rates in December by 25 basis points, the third cut last year, taking its benchmark rate to between 4.25 percent and 4.50 percent, where it had held steady since.

Federal Reserve Chairman Jerome Powell has emphasised that uncertainty in the economy has kept the Fed cautious, arguing that maintaining rates gave policymakers flexibility as conditions shifted.

The cut comes as a response to shifting economic conditions, following a slew of weak jobs reports showing a slowdown in growth in the labour market and a slight uptick in inflationary pressures.

“Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated,” the central bank said in a press release.

“Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.”

Investors are also waiting for indications from the central bank on whether it will cut interest rates two or three times for the rest of the year as economic uncertainty weighs on the US labour market and the broader economy while the costs of goods and services increase under tariff-driven pressures.

Political pressure

The latest cut comes at a time of heightened scrutiny and pressure on the Fed, which has long emphasised its independence from political pressure. But for months, US President Donald Trump has publicly attacked the central bank, mocking Powell as “too late Powell” over his cautious approach to cutting rates.

At the same time, the Republican-led White House has sought to oust Fed Governor Lisa Cook, who was appointed by former US President Joe Biden, a Democrat, citing alleged mortgage fraud.

On Monday, a US appeals court blocked Trump from removing her. The administration has said it will challenge the ruling.

“The president lawfully removed Lisa Cook for cause. The administration will appeal this decision and looks forward to ultimate victory on the issue,” White House spokesman Kush Desai said on Tuesday.

That same day, Stephen Miran, chair of Trump’s Council of Economic Advisors, was sworn in to fill a temporary Fed seat left vacant by Adriana Kugler until January, while the White House searches for a permanent replacement.

Miran pledged to act independently, but his close ties to the Trump administration — and his work as a fellow at the conservative Manhattan Institute — have raised doubts. His Senate confirmation fell largely along party lines, 47–48, and Senator Lisa Murkowski of Alaska was the only Republican to oppose him.

On Monday, Senate Minority Leader Chuck Schumer called Miran “nothing more than Donald Trump’s mouthpiece at the Fed”.

Markets respond

As of 2pm in New York (18:00 GMT), US markets are trending upwards. The Nasdaq is about even with the market open, the S&P 500 is up 0.2, and the Dow Jones Industrial Average is up by 1 percent.

New York, USA – Next week, the United States Federal Reserve will hold a two-day policy meeting to decide whether to lower interest rates.

The meeting follows a months-long pause in rates and comes amid heightened pressure on the central bank.

US President Donald Trump recently dismissed Federal Reserve Governor Lisa Cook on allegations of mortgage fraud, which she is contesting in court, and has escalated his loud and repeated criticism of Fed Chair Jerome Powell.

The Fed, which emphasises its independence from political influence, will weigh new economic data as it considers its next move. The benchmark interest rate has remained at 4.25 percent – 4.50 percent since December.

So far, the Fed has held rates steady, saying the stance preserves flexibility to respond to economic shocks tied to shifting trade policy. But many economists now believe a rate cut is imminent.

They point to signs of a cooling labour market and tariff-related pressure on inflation as factors that could support lowering rates, not political pressure.

“I think that the Fed has made it pretty clear that they’re going to cut rates in September, and the market certainly expects that,” Daniel Hornung, policy fellow at Stanford Institute of Economic Policy Research and former deputy director of the National Economic Council, told Al Jazeera.

CME FedWatch, which tracks the probability of Fed policy moves, puts the likelihood of a quarter of one percentage point cut at 94.5 percent, echoing research from JPMorgan last month.

“For Fed Chair Jerome Powell, the risk management considerations may go beyond balancing employment and inflation risks, and we now see the path of least resistance is to pull forward the next cut of 25 basis points to the September meeting,” Michael Feroli, chief US economist at JP Morgan, said at the time.

Prices jump

Consumer prices rose 0.4 percent in August from the previous month, the sharpest increase in seven months, according to the Labor Department’s consumer price index (CPI) report released on Thursday.

The gain followed a 0.2 percent rise in July. Economists surveyed by Reuters had forecast a 0.3 percent monthly increase in core CPI.

Energy costs climbed 0.7 percent, fueled by a 1.9 percent jump in gasoline. Airfares climbed 5.9 percent, apparel prices rose 0.5 percent, shelter increased 0.4 percent, grocery prices were up 0.6 percent, and restaurant meals rose 0.3 percent.

Some goods saw particularly steep increases. Coffee prices jumped 3.6 percent on the month as Brazil, the world’s top coffee exporter, redirected shipments away from the US following new tariffs.

The Producer Price Index (PPI), which tracks prices businesses receive for goods and services, showed coffee up nearly 7 percent from July and more than 33 percent over the past year.

There is a comparable phenomenon with beef, for which the US relies heavily on Brazil.  CPI data showed a 2.7 percent increase, while the PPI measured a 6 percent monthly rise and a 21 percent yearly increase.

Overall, the PPI slipped 0.1 percent, suggesting some businesses are absorbing tariff costs rather than passing them to consumers. Service prices fell 1.7 percent, driven by a 3.9 percent decline in margins for machinery and vehicle wholesalers, which offset a 0.1 percent increase in goods prices. That came after wholesale inflation was revised higher to 0.7 percent in July, which was well above economists’ forecasts.

Even so, companies are beginning to warn that they cannot continue absorbing higher costs. In recent weeks, Campbell’s Co, which makes Campbell’s Soup and Goldfish crackers, and Procter & Gamble have both said they plan to raise prices on consumer goods in the months ahead as tariff pressures persist.

Labour market tumbles

The US labour market, a key factor in the Federal Reserve’s interest rate decisions, has cooled sharply.

Approximately 263,000 people submitted initial jobless claims last week, the most in four years, Department of Labor data released on Thursday showed.

On Tuesday, the Bureau of Labor Statistics also revised down job gains over the past few months, as well as between April 2024 and March 2025, when the US economy added 911,000 fewer jobs than had been previously reported.

All of that is echoed by poor jobs numbers last week. In August, the economy added only 22,000 jobs, with gains concentrated in healthcare (which added 31,000 jobs) and social assistance (which added 16,000). The unemployment rate climbed to 4.3 percent, the Labor Department reported.

Revisions showed July job growth slightly stronger at 79,000, up from 73,000, while June was cut from a modest gain to a loss of 13,000.

“The recent job numbers were really, especially the revision of the earlier numbers, were really kind of problematic for the economy,” Michael Klein, professor of International Economic Affairs at the Fletcher School at Tufts University, told Al Jazeera.

Job openings and turnover also declined, leaving more unemployed workers than available positions for the first time since April 2021.

A report from Challenger, Gray & Christmas highlighted the strain, noting a 39 percent jump in job cuts between July and August. Private payroll growth slowed as well, according to the ADP National Employment Report, which showed just 54,000 jobs added, down from 106,000 the prior month.

Competing forces

Typically, high inflation prompts higher interest rates, which discourage borrowing and spending and help rein in prices.

“The Fed is in a very difficult position right now because there is both a weakening labour market and evidence of higher inflation. Typically, if the Fed is facing a weaker labour market, it would want to lower interest rates. And if it’s facing higher inflation, it would want to raise interest rates. But we’re in a situation now where there are countervailing forces,” Klein said.

The labour market is already weighing on consumer spending. Rising layoffs and slower hiring have made shoppers cautious, and the latest consumer confidence index shows plans to buy big-ticket and discretionary items are slipping.

With Trump’s shifting tariffs and hardline immigration policies, businesses are stuck in a “wait-and-see” mode, increasing uncertainty.

“We are seeing immigration and tariff policies that have the simultaneous effect of raising prices and slowing growth in the labour market,” Hornung said.

Salesforce has slashed another 4,000 jobs from its customer support workforce as the tech giant doubles down on artificial intelligence, even as the company reports strong financial results.

The latest layoffs gutted Salesforce’s customer service division, reducing its headcount from 9,000 to 5,000. AI agents now reportedly handle about one million customer conversations.

In a recent episode of The Logan Bartlett Show, CEO Marc Benioff justified the cuts by saying he “needs less heads” as Salesforce invests heavily in AI across its operations.

Earlier this year, Benioff boasted that AI was already doing 30 to 50 percent of the work, which he framed as efficiency gains – a 17 percent cost reduction achieved after shedding 1,000 people in February.

On Wednesday, the Slack owner reported revenue topped $10.2bn for the quarter ending July 31, up 10 percent from the same period last year. The company also announced a $20bn increase in its share buyback plan.

“These results reflect the success of our customers – like Pfizer, Marriott and the US Army – who are transforming into agentic enterprises, where humans and AI agents work side by side to reimagine workflows, accelerate productivity, and deliver customer success,” Benioff said.

“We exceeded all our financial targets while achieving our 10th consecutive quarter of operating margin expansion, delivering strong returns and maximising value for our customers and shareholders.”

But the business software provider also forecast that the current quarter revenue would be below Wall Street estimates, as clients dial back spending on its enterprise cloud products due to macroeconomic uncertainty.

Shares of the San Francisco, California-based company fell more than 4 percent in trading after the bell.

Benioff, whose annual compensation package was valued at $55m, has openly embraced automation as a central pillar of Salesforce’s future even as thousands lose their jobs. He insists the aggressive replacement of people with machines is worth celebrating, calling the past year of AI expansion “the eight most exciting months of my career”.

This is not new for Salesforce. In early 2023, Benioff oversaw a mass layoff of 7,000 workers, roughly 10 percent of the company’s global workforce, although later in the year, the cloud computing giant hired 3,000 workers.

A mixed message

“Just months ago, they [Salesforce] downplayed AI’s threat to jobs. The latest action raises important questions on trust in the sector. It’s very damaging and gives rise to a climate of fear among the industry’s wider workforce,” tech consultant Waseem Mirza told Al Jazeera.

In July, Benioff echoed that softer line, insisting AI would “augment” rather than replace people. Just a day before announcing the layoffs, he doubled down on that reassurance in a post on X.

“Our agentic future is not preordained. If AI replaces human judgment, creativity, empathy, we diminish ourselves,” he wrote.

“This is quite an important signal that this says to the tech sector with the biggest AI-driven layoffs thus far and could lead to a copycat effect across the sector,” Mirza said.

“The disruption is growing day by day, and we are going to see it continue.”

Salesforce is not alone. Recruit Holdings, the parent company of Indeed and Glassdoor, cut 1,300 jobs amid its AI shift in July. Klarna laid off 40 percent of its workforce earlier this year. Duolingo announced in April it would stop hiring contractors and replace them with AI.

“Internally [at Salesforce], these cuts can be read as a way to maximise efficiency and ultimately shareholder value. But there’s a risk when companies cut too deeply in junior positions; they may be undermining their own future talent pipeline, which could hurt them strategically in the long run,” Fabian Stephany, assistant professor for AI and Work at the University of Oxford, told Al Jazeera.

That concern is widely shared across the industry. Dario Amodei, the CEO of Anthropic, told the outlet Axios earlier this year that AI could eliminate half of all entry-level white-collar jobs.

“Highly exposed” fields have seen a 13 percent relative decline in opportunities for workers aged 22-25 between October 2022 and July 2025. In tech specifically, the effect is even more amplified. Opportunities for software engineers have fallen 20 percent, according to new research from Stanford University.

Salesforce did not respond to Al Jazeera’s request for comment.

EJ Antoni, United States President Donald Trump’s nominee to lead the Bureau of Labor Statistics, the agency that produces the nation’s jobs and inflation data, has been embroiled in criticism from economists.

Antoni was chief economist at the conservative Heritage Foundation and an author of Project 2025, the far-right wish list the think tank created for then-candidate Trump – or the next Republican president.

His selection threatens to bring a new level of politicisation to a producer of measurements of the nation’s economic health that has, for decades, been widely regarded as a nonpartisan and reliable agency.

“Trump has nominated a sycophant to tell him exactly what he wants to hear. Make no mistake: This selection is a clear assault on independent analysis that will have far-reaching implications for the reliability of US  economic data,” Alex Jaquez, a member of the White House National Economic Council under former President Joe Biden, said in a statement provided to Al Jazeera.

Many former Labor Department officials say that while it is unlikely Antoni will be able to distort or alter the data, particularly in the short run, he could change the currently dry-as-dust way it is presented.

Antoni was nominated by Trump after the Bureau of Labor Statistics (BLS) released a jobs report on August 1 that showed that hiring had weakened in July and was much lower in May and June than the agency had previously reported. Trump, without evidence, charged that the data had been “rigged” for political reasons and fired the then-BLS chair, Erika McEntarfer, much to the dismay of many within the agency and the broad condemnation of experts.

“Firing officials for reporting accurate data unflattering to the regime is straight out of the authoritarian playbook. It is an attempt to mislead the American people, to avoid being held to account for their failures, and to rewrite history,” Vanessa Williamson, senior fellow at the Urban-Brookings Tax Policy Center, said in a statement provided to Al Jazeera.

Antoni’s nomination comes as Trump continues to spin fabrications throughout the US economic data, including claiming gas prices are lower than they are and that egg prices have fallen 400 percent – a mathematically impossible figure.

Government data critic

Antoni has been a vocal critic of the government’s jobs data in frequent appearances on podcasts and cable TV. His partisan commentary is unusual for someone who may end up leading the BLS.

On August 4, a week before he was nominated, Antoni said in an interview on Fox News Digital that the Labor Department should stop publishing the monthly jobs reports until its data collection processes improve, and rely on quarterly data based on actual employment filings with state unemployment offices.

The monthly employment reports are probably the most closely watched economic data on Wall Street, and can frequently cause swings in stock prices.

When asked at Tuesday’s White House briefing whether the jobs report would continue to be released, press secretary Karoline Leavitt said the administration hoped it would be.

“I believe that is the plan and that’s the hope,” Leavitt said.

Leavitt also defended Antoni’s nomination, calling him an “economic expert” who has testified before Congress and adding that, “the president trusts him to lead this important department.”

Yet Antoni’s TV and podcast appearances have created more of a portrait of a conservative ideologue, instead of a careful economist who considers tradeoffs and prioritises getting the math correct.

“There’s just nothing in his writing or his resume to suggest that he’s qualified for the position, besides that he is always manipulating the data to favour Trump in some way,” said Brian Albrecht, chief economist at the International Center for Law and Economics, told The Associated Press.

Antoni wrongly claimed in the last year of Biden’s presidency that the economy had been in recession since 2022; he called on the entire Federal Reserve board to be fired for not earning a profit on its Treasury securities holdings; and posted a chart on social media that conflated timelines to suggest inflation was headed to 15 percent.

His argument that the US was in a recession rested on a vastly exaggerated measure of housing inflation, based on newly purchased home prices, to artificially make the nation’s gross domestic product appear smaller than it was.

“This is actually maybe the worst Antoni content I’ve seen yet,” Alan Cole of the centre-right Tax Foundation said on social media, referring to his recession claim.

On a 2024 podcast, Antoni wanted to sunset Social Security payments for workers paying into the system, saying that “you’ll need a generation of people who pay Social Security taxes but never actually receive any of those benefits.” As head of the BLS, Antoni would oversee the release of the consumer price index by which Social Security payments are adjusted for inflation.

Flawed data

Many economists share, to some degree, Antoni’s concerns that the government’s jobs data has flaws and is threatened by trends such as declining response rates to its surveys. The drop has made the jobs figures more volatile, though not necessarily less accurate over time.

“The stock market moves clearly based on these job numbers, and so people with skin in the game think it’s telling them something about the future of their investments,” Albrecht said. “Could it be improved? Absolutely.”

Katharine Abraham, an economist at the University of Maryland who was BLS commissioner under President Bill Clinton, said updating the jobs report’s methods would require at least some initial investment.

The government could use more modern data sources, she said, such as figures from payroll processing companies, and fill in gaps with surveys.

“There’s an inconsistency between saying you want higher response rates and you want to spend less money,” she said, referring to the administration’s proposals to cut BLS funding.

Still, Abraham and other former BLS commissioners do not think Antoni, if confirmed, would be able to alter the figures. He could push for changes in the monthly press release and seek to portray the numbers in a more positive light.

William Beach, who was appointed BLS commissioner by Trump in his first term and also served under Biden, said he is confident that BLS procedures are strong enough to prevent political meddling. He said he did not see the figures until two days before publication when he served as commissioner.

“The commissioner does not affect the numbers,’’ Beach said. “They don’t collect the data. They don’t massage the data. They don’t organise it.”

Regarding the odds of rigging the numbers, Beach said, “I wouldn’t put it at complete zero, but I’d put it pretty close to zero.’’

It took about six months after McEntarfer was nominated in July 2023 for her to be approved. Antoni will likely face stiff opposition from Democrats, but that may not be enough to derail his appointment.

Senator Patty Murray, a senior Democrat from Washington, on Tuesday slammed Antoni as “an unqualified right-wing extremist” and demanded that the GOP chairman of the Senate Health, Education, Labor and Pensions Committee, Senator Bill Cassidy of Louisiana, hold a confirmation hearing for him.

Trump’s sectoral tariffs on steel, aluminium and autos have hit the manufacturing sector hard and reduced hiring.

The Canadian economy lost tens of thousands of jobs in July, sending the share of people employed to an eight-month low as the labour market gave back the gains seen in the prior month.

The economy shed 40,800 jobs in July, compared with a net addition of 83,000 jobs in June, taking the employment rate, or the percentage of people employed out of the total working-age population, to 60.7 percent, Statistics Canada said on Friday.

The unemployment rate, however, remained steady at a multiyear high of 6.9 percent.

Analysts polled by Reuters had forecast the economy would add 13,500 jobs and the unemployment rate would tick up to 7 percent.

“Canada’s labour market snapped back to reality in July,” Michael Davenport, senior economist at Oxford Economics, wrote in a note.

United States President Donald Trump’s sectoral tariffs on steel, aluminium and cars have hit the manufacturing sector hard and reduced the hiring intentions of companies, the Bank of Canada has previously said.

The number of people employed in manufacturing shrank by close to 10,000 in July on a yearly basis as sectors linked to steel, aluminium and carmaking curtailed hiring and experienced layoffs.

Marty Warren, the United Steelworkers’ national director for Canada, told Reuters that about 1,000 members have been laid off.

Oxford Economics’s Davenport predicts more layoffs in the coming months, forecasting about 140,000 lost jobs and an unemployment rate rising to the mid-7 percent range later this year.

Employment in some areas has held up well despite tariffs, the data showed.

Overall, there has been little net employment growth since the beginning of the year, StatsCan said. The layoff rate was virtually unchanged at 1.1 percent in July compared with 12 months earlier.

The bulk of the job losses in July occurred among workers aged between 15 and 24 – that group’s unemployment rate edged up to 14.6 percent, the highest since September 2010, excluding the pandemic years of 2020 and 2021.

Policy rate

The youth unemployment rate is usually higher than the country’s average.

The employment rate for this group, which accounts for about 15 percent of the total working-age population, sank to 53.6 percent, the lowest level since November 1998 if the pandemic years are excluded.

The Bank of Canada kept its key policy rate unchanged last week, partly due to a strong labour market, but indicated it might reduce lending rates if inflation stays under control and economic growth weakens.

“We are now a bit more confident in our view that the Bank of Canada will resume cutting next month, although a surprisingly strong CPI [Consumer Price Index] print next week could prompt another pause,” said Alexandra Brown, North America economist at Capital Economics.

Money market bets show the odds of a rate cut at the next monetary policy meeting on September 17 at 38 percent, up 11 percentage points from Thursday.

The information, culture and recreation sector lost 29,000 jobs last month, marking the biggest decline, followed by 22,000 lost jobs in construction and 19,000 in business, building and other support services.

The average hourly wage of permanent employees – a gauge closely tracked by the Bank of Canada to ascertain inflationary trends – grew by 3.5 percent in July to 37.66 Canadian dollars ($27.4) per hour, against a 3.2 percent increase in the prior month.

US President Trump alleged that the data had been manipulated to make him look bad.

United States President Donald Trump has removed the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported.

Trump, in a post on his social media platform on Friday, alleged that the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics (BLS), who was appointed by former President Joe Biden, should be fired. He provided no evidence for the charge.

“I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,” Trump said on Truth Social. “She will be replaced with someone much more competent and qualified.”

Trump later posted: “In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad.”

After his initial post, Labor Secretary Lori Chavez-DeRemer said on X that McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director.

“I support the President’s decision to replace Biden’s Commissioner and ensure the American People can trust the important and influential data coming from BLS,” Chavez-DeRemer said.

Friday’s jobs report showed that just 73,000 jobs were added last month and that 258,000 fewer jobs were created in May and June than previously estimated. The report suggested that the economy has sharply weakened during Trump’s tenure, a pattern consistent with a slowdown in economic growth during the first half of the year and an increase in inflation during June that appeared to reflect the price pressures created by the president’s tariffs.

“What does a bad leader do when they get bad news? Shoot the messenger,” Democratic Senate Leader Chuck Schumer of New York said in a Friday speech.

Revisions to hiring data

Trump has sought to attack institutions that rely on objective data for assessing the economy, including the Federal Reserve and, now, the BLS. The actions are part of a broader mission to bring the totality of the executive branch – including independent agencies designed to objectively measure the nation’s wellbeing – under the White House’s control.

McEntarfer was nominated by Biden in 2023 and became the commissioner of the BLS in January 2024. Commissioners typically serve four-year terms, but since they are political appointees, they can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants.

The Senate confirmed McEntarfer to her post 86-8, with now Vice President JD Vance among the yea votes.

Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 percent from 4.1 percent.

“No one can be that wrong? We need accurate Jobs Numbers,” Trump wrote. “She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”

The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 percent lower on Friday.

While the jobs numbers are often the subject of political spin, economists and Wall Street investors – with millions of dollars at stake – have always accepted US government economic data as free from political manipulation.

As United States President Donald Trump blasts his way through tariff announcements, one thing is clear, experts say: Some level of duties is here to stay.

In the past few weeks, Trump has announced a string of deals – with the European Union, Japan, Indonesia, Vietnam and the Philippines – with tariffs ranging from 15 percent to 20 percent.

He has also threatened Brazil with a 50 percent tariff, unveiled duties of 30 percent and 35 percent for major trading partners Mexico and Canada, and indicated that deals with China and India are close.

How many of Trump’s tariff rates will shake out is anybody’s guess, but one thing is clear, according to Vina Nadjibulla, vice president of research and strategy at the Asia Pacific Foundation of Canada: “No one is getting zero tariffs. There’s no going back.”

Trump’s various announcements have spelled months of chaos for industry, leaving businesses in limbo and forcing them to pause investment and hiring decisions.

The World Bank has slashed its growth forecasts for nearly 70 percent of economies – including the US, China and Europe, and six emerging market regions – and cut its global growth estimate to 2.3 percent, down from 2.7 percent in January.

Oxford Economics has forecast a shallow recession in capital spending in the Group of Seven (G7) countries – Canada, France, Germany, Italy, Japan, the United Kingdom and the US – lasting from the second quarter to the third quarter of this year.

“What we’re seeing is the Donald Trump business style: There’s lots of commotion, lots of claim, lots of activity and lots of b*******,” Robert Rogowsky, professor of international trade at the Middlebury Institute of International Studies, told Al Jazeera.

“That’s his business model, and that’s how he operates. That’s why he’s driven so many of his businesses into bankruptcy. It’s not strategic or tactical. It’s instinctive.”

Rogowsky said he expects Trump to push back his tariff deadline again, after delaying it from April to July, and then to August 1.

“It’s going to be a series of TACO tariffs,” Rogowsky said, referring to the acronym for “Trump Always Chickens Out”, a phrase coined by Financial Times columnist Robert Armstrong in early May to describe the US president’s backpedalling on tariffs in the face of stock market turmoil.

“He will bump them again,” Rogowsky said. “He’s just exerting the image of power.”

Trump’s back-and-forth policy moves have characterised his dealings with some of the US’s biggest trade partners, including China and the EU.

China’s tariff rate has gone from 20 percent to 54 percent, to 104 percent, to 145 percent, and then 30 percent, while the deadline for implementation has shifted repeatedly.

The proposed tariff rates for the EU have followed a similar pattern, going from 20 percent to 50 percent to 30 percent, and then 15 percent following the latest trade deal.

The EU’s current tariff rate only applies to 70 percent of goods, with a zero rate applying to a limited range of exports, including semiconductor equipment and some chemicals.

European steel exports will continue to be taxed at 50 percent, and Trump has indicated that new tariffs could be on the way for pharmaceutical products.

Despite the trade deals, many details of how Trump’s tariffs will work in practice remain unclear.

Whether Trump announces more changes down the track, analysts agree that the world has entered a new phase in which countries are seeking to become less reliant on the US.

“Now that the initial shock and anger [at Trump policies] has subsided, there is a quiet determination to build resilience and become less reliant on the US,” Nadjibulla said, adding that Trump was pushing countries to address longstanding issues that had been untouchable before.

Canada, for instance, is tackling inter-provincial trade barriers, a politically sensitive issue historically, even as it looks elsewhere to increase exports, said Tony Stillo, director of Canada Economics at Oxford Economics.

“It would be foolhardy not to provide to the US, seeing as it’s our largest market, but it also makes us more resilient to provide to other markets as well,” Stillo told Al Jazeera.

Canadian Prime Minister Mark Carney has reached out to the EU and Mexico and indicated his wish to improve his country’s strained relations with China and India.

This month, Canada expanded its exports of liquified natural gas beyond the US market, with its first shipment of cargoes to Asia.

To mitigate the fallout of Trump’s tariffs, Ottawa has been offering relief to Canadian businesses, including automakers, and has instituted a six-month pause on tariffs on some imports from the US to give firms time to re-adjust their supply chains.

There is also “some relief” in the fact that other countries “don’t seem to be imitating the Trump show [by levying their own tariffs]. They’re witnessing this attempt to strong-arm the rest of the world, but it doesn’t seem to be working,” Mary Lovely, the Anthony M Solomon senior fellow at the Peterson Institute for International Economics (PIIE), told Al Jazeera.

But the world is watching how the tariffs will affect the US economy, as “that will also be instructive to other countries”, Lovely said.

“If we see a slowdown, as we expect, it becomes a cautionary tale for others.”

Although the US stock market is near an all-time high, it is heavily weighted towards the “magnificent seven”, said Lovely, referring to the largest tech companies, and that reflects just one part of the economy.

Re-emergence of industrial policy

Trump’s tariffs come on top of other growing challenges for exporters the world over, including China’s subsidy-heavy industrial policy that allows its businesses to undercut its competitors.

“We’ve entered a period of global economic alignment with the reintroduction of industrial policies,” Nadjibulla said, explaining that more and more governments are likely to roll out support for their domestic industries.

“Each country will have to navigate these and find ways to de-risk and reduce overreliance on the US and China.”

Still, countries seeking to support their homegrown industries will have to do so while reckoning with the World Trade Organization and rules-based trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Nadjibulla said.

“It will take some tremendous leadership around the world to corral this wild mustang [Trump] before he breaks up the world order,” Rogowsky said.

“But it will break because I do think Donald Trump will drive us into a recession.”

Booking tumbled in the summer months as consumers pulled back on travel expenses

American Airlines has restored its full-year outlook as broader economic uncertainty continues to weigh on domestic consumer demand across the travel industry.

The Fort Worth, Texas-based carrier on Thursday offered a wide range for its full-year forecast on the heels of its earnings report, saying the broader economic uncertainty is hobbling consumer spending. The airline had suspended financial guidance in April.

The airline says it expects an adjusted loss per share of 20 cents a share to a profit of 80 cents a share in 2025. The midpoint of the forecast is 30 cents per share, compared with analysts’ average estimate of 61 cents a share, according to LSEG data.

American, which generates more than two-thirds of its passenger revenue from the US domestic market, said that if domestic travel demand continues to strengthen, it expects to hit the top end of its outlook. But if the economy weakens, it only expects to be at the bottom end of the forecast.

“The domestic network has been under stress because of the uncertainty in the economy and the reluctance of domestic passengers to get in the game,” CEO Robert Isom told analysts on an earnings call.

American said tepid domestic travel demand affected its bookings in July. Isom, however, said the performance is expected to improve sequentially in August and September.

“We expect that July will be the low point,” he said.

The company expects its domestic unit revenue, or revenue generated from each seat, to remain lower year-over-year in the third quarter. Its non-fuel operating costs are estimated to be up as much as 4.5 percent in the September quarter.

American expects an adjusted loss per share in the range of 10 cents to 60 cents in the third quarter, compared with analysts’ estimates of a loss of 7 cents, according to data compiled by LSEG.

The company’s outlook contrasts with upbeat forecasts of rival Delta and United Airlines. Alaska Air Group has also reported improvements in passenger traffic and pricing power.

Most US airlines withdrew their financial forecasts in April as President Donald Trump’s trade war created the biggest uncertainty for the industry since the COVID-19 pandemic. While some have reinstated their expectations, there is lingering uncertainty as to how the economy will fare in an ever-evolving tariff landscape.

Demand in the domestic travel market has remained subdued, with budget travellers approaching their plans with caution, hurting carriers that primarily service the US domestic market and price-sensitive customers.

Even summer, typically the peak money-making season for airlines, is falling short this year, with unsold standard economy seats forcing carriers to cut fares.

It dented the second-quarter earnings of Southwest Airlines, the largest US domestic airline.

At American, the domestic market was the weakest in the second quarter, with its unit revenue declining 6.4 percent from a year ago. The company’s unit revenue in international markets was up, led by a 5 percent annual jump in the transatlantic market.

On Wall Street, the stock is taking a hit and was down 7.2 percent from the market open as of 11:30am in New York (15:30 GMT).

The United States economy has added 147,000 jobs in June, beating analyst expectations, as the labour market remains stable despite economic uncertainty driven by President Donald Trump’s policies.

The Department of Labor released the numbers on Thursday. The data, which was released a day early because the Independence Day holiday falls on Friday, showed the unemployment rate ticked down from May by 0.1 percentage points to 4.1 percent. The average workweek was shorter last month, suggesting businesses were probably reducing hours amid rising economic headwinds.

Government jobs at the state and local levels led the gains, adding 73,000 positions in June. State governments added 47,000 jobs, led by 40,000 in education. Local government jobs grew by 23,000. A downward turn continues at the federal level with a loss of 7,000 jobs, which accounts for 69,000 jobs lost since January.

Gains in government jobs were followed by the healthcare sector, which added 39,000 jobs. Social assistance employment increased by 19,000 jobs.

“On net, it was a good report,’’ Sarah House, senior economist with Wells Fargo, told The Associated Press news agency.

“But when you dig underneath the surface, it was another jobs report that didn’t look quite as good as first meets the eye.’’

Looming uncertainty driven by Trump’s tariffs and immigration policies led to little change across much of the private sector in terms of hiring, including in construction, mining, oil and gas extraction, wholesale and retail trade, transportation, financial services, professional and business services, and leisure and hospitality.

Trump’s constant changes in tariffs policy, announcing and suspending import taxes and then coming up with new ones, has left businesses bewildered and hesitant to make decisions about hiring and investment.

Layoffs have started, but they are still relatively low. The Labor Department’s weekly jobless claims report, which also came out on Thursday said claims fell by 4,000 to 233,000. The ADP private payroll report out on Wednesday showed a net loss of 33,000 jobs.

“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” said Nela Richardson, chief economist at ADP.

Thursday’s jobs report also showed average hourly wages came in cooler than forecasters expected, rising 0.2 percent from May and 3.7 percent from a year earlier.

The year-over-year number is inching closer to the 3.5 percent year-over-year number considered consistent with the Federal Reserve’s 2 percent inflation target.

“For the FOURTH month in a row, jobs numbers have beat market expectations with nearly 150,000 good jobs created in June,” White House Press Secretary Karoline Leavitt said in a statement.

“The economy is booming again and it will only get better when the One, Big, Beautiful Bill is passed and implemented,” she said, referring to Republican legislation to cut taxes, food assistance and the Medicaid health insurance programme for low-income Americans.

Growth slowdown

Despite the White House’s characterisation, the US job market has cooled significantly in the past year. This year, employers have added an average of 130,000 jobs per month, down from an average of 186,000 in 2024. From 2021 to 2023, the US economy added an average of 400,000 jobs per month as it made up for jobs shed during the COVID-19 pandemic.

Other data show the US economy contracting. Last week, a report from the Department of Commerce found the US economy shrank by 0.5 percent in the first quarter.

The US labour force – the count of those working and looking for work – fell by 130,000 last month after a drop of 625,000 in May. Economists expected Trump’s immigration deportations – and the fear of them – to push foreign workers out of the labour force.

The Labor Department said the number of workers who believe no jobs are available for them rose by 256,000 last month to 637,000.

Wells Fargo expected monthly job growth to fall below 100,000 in the second half of the year. “We’re bracing for a much lower pace of job growth,” House said. ”There’s still a lot of policy uncertainty.”

With the Friday notices, 85 percent of Voice of America’s workforce had been slashed.

Layoff notices have been sent to 639 employees of Voice of America (VOA) and the United States agency that oversees it, effectively shutting down the outlet that has provided news to countries around the world since World War II.

The notices sent on Friday included employees at VOA’s Persian-language service who were suddenly called off administrative leave last week to broadcast reports to Iran following Israel’s attack.

Three journalists working for the Persian service on Friday, who left their office for a cigarette break, had their badges confiscated and weren’t allowed back in, according to one fired employee.

In total, some 1,400 people at VOA and the US Agency for Global Media, or 85 percent of its workforce, have lost their jobs since March, said Kari Lake, Trump’s senior adviser to the agency. She said it was part of a “long overdue effort to dismantle a bloated, unaccountable bureaucracy”.

“For decades, American taxpayers have been forced to bankroll an agency that’s been riddled with dysfunction, bias and waste,” Lake said in a news release. “That ends now.”

VOA began by broadcasting stories about US democracy to residents of Nazi Germany, and grew to deliver news around the world in dozens of languages, often in countries without a tradition of free press.

But President Donald Trump has fought against the news media on several fronts, with the complaint that much of what they produce is biased against conservatives. That includes a proposal to shut off federal funding to PBS and NPR, which is currently before Congress.

‘Death’ of independent journalism

Most VOA employees have been on administrative leave since March 15, their broadcasts and social media posts mostly silenced. Three VOA employees who are fighting the administration’s dismantling of VOA in court were among those receiving layoff notices on Friday.

“It spells the death of 83 years of independent journalism that upholds US ideals of democracy and freedom around the world,” plaintiffs Jessica Jerreat, Kate Neeper and Patsy Widakuswara said in a statement.

The Persian-language employee, who spoke on condition of anonymity because of the ongoing legal case, was in the office Friday when colleagues were barred from re-entry. The person was afraid to leave for the same reason – even though authorities said their work had been halted – until receiving a layoff notice.

Steve Herman, VOA’s chief national correspondent who was in the process of retiring to take a job at the University of Mississippi, called the layoffs an “historic act of self-sabotage with the US government completing the silencing of its most effective soft-power weapon”.

It’s not clear what, if anything, will replace VOA’s programming worldwide. The Trump-supporting One American News Network has offered to allow its signal to be used.

Although plaintiffs in the lawsuit called on Congress to continue supporting VOA, Herman said that he is not optimistic that it will survive, even if a Democratic president and Congress take over. For one thing, every day it is off the air is another day for viewers and readers to get into another habit for obtaining news.

“I believe that the destruction is permanent,” Herman said, “because we see no indication in the next fiscal year that Congress will rally to fund VOA.”

By the time another administration takes power that is more sympathetic to the outlet, “I fear that VOA will have become forgotten,” he said.