Finance
August Payrolls Blow Past Estimates With 162,000 Jobs Added, Reviving Fed Rate-Hike Bets
The U.S. economy added 162,000 jobs in August, according to Labor Department data released Friday, nearly tripling economist forecasts of 56,000 and delivering the clearest signal yet that July’s shocking job losses were more of an aberration than the start of a genuine downturn. The unemployment rate held steady at 4.1%, matching expectations. The blowout report stood in sharp contrast to the private-sector ADP data released earlier in the week, which had shown private payrolls growing by just 38,000 — underscoring how differently the two closely watched measures can read the same labor market in the same month. Friday’s official government count showed private payrolls alone climbing by 127,000, nearly triple the 45,000 economists had penciled in, while government employment added a further 35,000 positions, including 50,000 new local government jobs that helped offset a modest decline in federal employment. The sector breakdown showed hiring concentrated in a handful of areas rather than spread evenly across the economy. Food services led non-farm categories with a gain of 59,000 jobs, reflecting continued strength in consumer spending on dining and hospitality even as other parts of the economy have shown signs of strain. Manufacturing added 16,000 positions and healthcare contributed 13,000 more, both solid if unspectacular gains. The information sector was the notable outlier, shedding 23,000 jobs in a continuation of the restructuring that has hit media, telecommunications and parts of the tech industry particularly hard over the past year as companies have restructured operations and, in some cases, replaced roles with AI-driven tools. Wage growth came in essentially in line with expectations, with average hourly earnings rising 3.1% year-over-year, just above the 3% economists had forecast. While that pace of wage growth remains historically solid, it continues to run behind the cumulative inflation increases many households have experienced over the past several years, meaning many workers’ paychecks are still not fully keeping pace with the cost of living even as nominal wage gains remain positive. The report’s real significance lies less in its individual numbers than in what it means for the Federal Reserve’s rate decision later this month. Just one month after a shockingly weak July jobs report had many economists penciling in rate cuts to shore up a softening labor market, Friday’s number flipped that calculus dramatically. Markets responded immediately: the probability traders assigned to a 25 basis point rate hike at the Fed’s September 15-16 meeting jumped to 60.4%, up sharply from 49.4% just the day before, according to futures pricing. Stock markets slipped in response, with the Dow, S&P 500 and Nasdaq all pulling back Friday as investors recalibrated their expectations for the path of monetary policy. Ellen Zentner, an economist at Morgan Stanley, captured the shift in sentiment succinctly, saying the “upside surprise in payrolls will likely ramp up concerns about a rate hike,” while cautioning that the following week’s inflation data would ultimately prove decisive for the Fed’s actual decision. Tim Urbanowicz at Goldman Sachs offered a somewhat more measured read, characterizing the strong report as reflecting ongoing “labor market rebalancing” rather than a fundamental shift in the economy’s trajectory. Adam Schickling of Vanguard struck a similar note, arguing that “the labor market remains resilient enough to keep the focus on inflation,” and suggesting that a single strong month, however dramatic relative to expectations, is unlikely on its own to materially change the Fed’s broader policy stance. The whipsaw between July’s contraction and August’s blowout leaves Fed Chair Kevin Warsh and his colleagues on the Federal Open Market Committee with a genuinely difficult call to make at their upcoming meeting. Warsh has been outspoken about prioritizing the fight against inflation, which has remained stubbornly above the Fed’s 2% target for much of the year, and Friday’s strong jobs data gives him and like-minded committee members ammunition to argue that the labor market can withstand tighter policy without tipping into serious weakness. At the same time, the sheer volatility in the data — a 23,000-job loss one month followed by a 162,000-job gain the next — makes it harder for the committee to have full confidence in any single data point as a guide to where the economy is actually headed. For everyday workers and businesses, the practical upshot of Friday’s report is further uncertainty about the direction of borrowing costs heading into the fall. A rate hike would mean continued elevated costs for mortgages, auto loans and business credit, potentially cooling some of the very hiring momentum the August report just demonstrated. A hold, or eventual cut, would ease those pressures but risks reinforcing inflation dynamics the Fed has spent years trying to bring under control. With the Consumer Price Index report due out before the Fed’s meeting, markets and policymakers alike are likely to treat that release as the true tiebreaker in a decision that, after Friday’s numbers, has become considerably harder to call than it looked just a few weeks ago. The swing between July and August also reignited a broader debate among economists about how much weight any individual monthly jobs report deserves in shaping expectations, given how frequently the data has been revised in recent years and how sharply the two most recent readings have diverged. Some labor economists have pointed to changes in survey response rates and methodology adjustments at the Bureau of Labor Statistics as partial explanations for the increased month-to-month volatility, while others argue the swings simply reflect genuine turbulence in an economy still working through the effects of tariffs, AI-driven restructuring in white-collar industries, and shifting immigration patterns that have all affected labor supply and demand in ways that are difficult to disentangle in real time. Political reaction to the report broke down along predictable lines. Administration officials pointed to the strong headline number as validation of the White House’s broader economic approach, while critics countered that a single month’s rebound does little to address the underlying wage stagnation relative to inflation that has weighed on household budgets for years. Both camps agreed on one point:…
Private Payrolls Add Just 38,000 Jobs in August, Missing Forecasts Again
Private employers added just 38,000 jobs in August, according to data released Wednesday by payroll processor ADP, falling well short of economist forecasts of 48,000 and marking the weakest month of hiring since January — the latest sign that the labor market’s slowdown from earlier this summer has not meaningfully reversed. The August figure also represents a step down from July’s revised gain of 46,000 jobs, suggesting the deceleration in hiring has continued rather than stabilized. The report lands two days before the Labor Department releases its own more comprehensive nonfarm payrolls report Friday, which economists expect to show a considerably stronger 56,000 new positions — a notable divergence between the two measures that, if it holds, would still represent a substantial rebound from July’s shocking loss of 23,000 jobs on the government’s official count. The unemployment rate is projected to hold steady at 4.1% in Friday’s report. The sector-by-sector breakdown in ADP’s data paints a mixed picture of an economy adding jobs unevenly rather than uniformly slowing across the board. Education and health services led all sectors by a wide margin, adding 45,000 positions on their own — meaning that without healthcare and education hiring, the broader private sector would have posted a net job loss for the month. Leisure and hospitality added a further 16,000 positions, while financial activities and the catch-all “other services” category each contributed 6,000 jobs. The weakness was concentrated in goods-producing and traditionally cyclical sectors. Manufacturing shed 17,000 jobs, continuing a rough stretch for American factories that have faced elevated input costs tied to this year’s tariff increases alongside softer demand in key export markets. Professional and business services, a category economists watch closely as a leading indicator for the broader labor market, lost 16,000 positions. Natural resources and mining, along with trade, transportation and utilities, each shed 5,000 jobs. The combination suggests employers in more economically sensitive industries have grown more cautious about adding headcount even as service-sector hiring in areas like healthcare continues largely unabated, insulated by demographic demand that doesn’t ebb and flow with the broader business cycle the way manufacturing and corporate services do. Wage data in the report told a more complicated story about the state of the labor market than the headline job-count numbers alone. Workers who stayed in their current jobs saw annual pay gains of 4.4%, a solid if unspectacular figure by recent historical standards. But workers who switched employers saw considerably faster wage growth of 7.3%, a gap ADP’s chief economist attributed to shifting compensation patterns driven partly by demographic turnover in the workforce and partly by the early effects of AI-related disruption reshaping which skills and roles command a premium in today’s job market. That widening gap between “stayer” and “switcher” wage growth has historically been read as a signal of at least some underlying tightness in specific pockets of the labor market, even as the top-line hiring numbers soften. The report adds a fresh data point to an increasingly consequential debate inside the Federal Reserve, which meets September 15-16 to decide on interest rates under new Chair Kevin Warsh. Warsh has been vocal about prioritizing the fight against inflation, which has remained elevated relative to the Fed’s 2% target for much of the year, even as the labor market has shown clear signs of cooling since the July jobs report first rattled markets with its unexpected contraction. Wednesday’s ADP numbers, while not as dire as July’s shock, do little to resolve the tension the Fed faces heading into its meeting: whether to hold rates steady to keep fighting inflation, or begin cutting to support a labor market that has now posted two straight months of underwhelming hiring data by two different measures. Markets have shown some sensitivity to the report, with traders adjusting rate-cut probabilities modestly following the release, though the more consequential data point for the Fed’s actual decision will likely be Friday’s official government jobs report and the following week’s Consumer Price Index reading, both of which will land in the two weeks before the September FOMC meeting. Economists caution against reading too much into any single month’s data given how volatile job-growth figures have been over the past year, but note that a second consecutive month of ADP data undershooting expectations, even a much less dramatic shortfall than July’s, reinforces a broader narrative of labor-market softening that has now persisted long enough to be difficult to dismiss as simple noise. For workers and job seekers, the practical effect of the slowdown has been a labor market that increasingly rewards those willing to change jobs over those who stay put — a dynamic reflected clearly in this month’s wage data — even as overall hiring across large swaths of the economy, particularly in manufacturing and professional services, remains notably subdued compared with the pace seen through most of the past several years. The divergence between ADP’s private-sector count and the government’s broader payrolls survey has itself become a recurring point of discussion among economists this year, since the two reports have told noticeably different stories in back-to-back months. ADP’s methodology draws on actual payroll processing data from the millions of businesses that use its payroll services, giving it a real-time window into private hiring, but it excludes government employment entirely and can diverge from the Labor Department’s survey-based approach in any given month due to differences in sampling, seasonal adjustment, and which businesses happen to be included. Economists generally caution against treating either report in isolation as the definitive read on the labor market, preferring instead to look at the trend across several months of both series together — a trend that, over the summer, has consistently pointed toward softening even as the exact monthly figures have bounced around. Retailers and small businesses in sectors like hospitality, which continued adding jobs even as manufacturing and professional services contracted, say they are still seeing steady consumer demand heading into the fall, a note of relative optimism that stands in some tension…
North Korea Stole 76% of All Crypto Hack Value Worldwide in 2026 Using Just Two Attacks
North Korean state-linked hackers accounted for a staggering 76% of all cryptocurrency stolen worldwide through the first four months of 2026, according to blockchain analytics firm TRM Labs, with two attacks alone netting the regime a combined $577 million even as international sanctions continue to formally cut it off from the global financial system. The two operations, carried out weeks apart in April, showcased increasingly sophisticated tactics that blockchain security researchers say represent a marked evolution from North Korea’s earlier, cruder hacking playbook. In the first attack, on April 1, hackers targeted Drift Protocol, a decentralized finance platform built on the Solana blockchain, stealing $285 million through a scheme that unfolded over months. The attackers spent weeks on social engineering — building trust with people who held authorization credentials — before spending roughly three weeks staging the theft directly on the blockchain itself. They ultimately exploited a feature of Solana’s transaction system known as a “durable nonce” to get the platform’s security council signers to pre-authorize transactions without fully realizing what they were approving, then executed 31 separate withdrawals in a rapid-fire window of approximately 12 minutes once the theft began in earnest. A separate North Korean group struck again just over two weeks later, on April 18, this time targeting KelpDAO through a cross-chain bridge built on the LayerZero protocol. That attack netted $292 million by compromising the remote procedure call nodes that platforms use to communicate with the blockchain, exploiting what researchers described as a single-verifier design flaw that allowed the attackers to push through fraudulent transactions without the additional layers of verification more robust systems require. In the aftermath, the Arbitrum Security Council managed to freeze roughly $75 million of the stolen funds before the hackers could move them further, but the bulk of the money was successfully laundered through THORChain, a decentralized cross-chain exchange that has become a favored laundering route for stolen crypto precisely because it allows funds to be swapped between different blockchains with minimal friction and limited centralized oversight. Combined, the two attacks totaled $577 million and, despite representing just 3% of the total number of crypto-theft incidents tracked globally in 2026, accounted for the overwhelming majority of the dollar value stolen across the entire industry during that period — a reflection of how selectively and effectively North Korean hacking units have come to target the largest, most lucrative platforms rather than pursuing high-volume, low-value theft. The scale of the haul lines up with a broader pattern researchers have documented in North Korea’s cyber operations over the past several years, in which state-linked hacking groups — most prominently the Lazarus Group, a unit widely believed to operate under North Korea’s Reconnaissance General Bureau intelligence agency — have increasingly targeted decentralized finance platforms, crypto exchanges and blockchain bridges as a primary funding mechanism for the isolated regime. Separate reporting from Bloomberg has put North Korean leader Kim Jong Un’s cumulative windfall from crypto theft and related illicit financial activity at roughly $22 billion, a sum that analysts say has become an increasingly important funding stream for a government that remains subject to some of the most extensive international sanctions of any country in the world, largely over its nuclear weapons and ballistic missile programs. The persistence and scale of the thefts have raised uncomfortable questions for the broader cryptocurrency industry about whether current security practices at even well-established platforms are adequate against a persistent, well-resourced state actor. Unlike criminal hacking groups motivated purely by short-term profit, North Korea’s units operate with the backing, patience and operational security resources of a nation-state, allowing them to invest months in reconnaissance and social engineering before executing a theft — an asymmetry that has repeatedly proven difficult for even sophisticated crypto platforms to defend against, since it targets human trust and institutional processes as much as it does purely technical vulnerabilities in code. U.S. and allied officials have long argued that North Korea’s crypto theft operations directly subsidize its weapons programs, helping the regime work around the formal international financial sanctions imposed by the United Nations Security Council and individual countries including the United States. That argument has taken on renewed urgency as North Korea has continued to expand its ballistic missile testing and, according to U.S. intelligence assessments, deepen military cooperation with Russia amid the ongoing war in Ukraine — cooperation that has reportedly included North Korean troops deployed to support Russian forces in exchange for military technology transfers, adding another dimension to concerns that sanctions-evading revenue streams like crypto theft are helping fund activity with consequences well beyond North Korea’s own borders. Industry groups and blockchain security firms have called for stronger cross-platform information sharing and more robust verification standards for the kinds of bridge and cross-chain infrastructure that both the Drift Protocol and KelpDAO attacks exploited, arguing that the current fragmented approach to security across thousands of independent DeFi platforms leaves systemic vulnerabilities that a sufficiently patient and well-funded attacker — state-sponsored or otherwise — will continue to find and exploit. Whether the industry moves quickly enough to close those gaps before North Korea’s hacking units identify the next one remains, based on the pattern of the past several years, very much an open question. U.S. Treasury officials have continued to add sanctions designations against individuals and front companies linked to North Korean cyber operations throughout the year, part of a broader effort to disrupt the laundering networks that convert stolen crypto into usable funds for the regime. But enforcement officials and blockchain analysts alike acknowledge that sanctions targeting individual wallets or front companies have had limited success in actually stopping the underlying theft, since decentralized platforms like THORChain are specifically designed to resist the kind of centralized control that would let a government freeze or block transactions the way it can with a traditional bank. Some lawmakers in Washington have pushed for legislation that would impose stricter know-your-customer requirements on cross-chain bridges and DeFi protocols, arguing that the industry’s continued resistance to centralized…
SNAP Turns 62 With Enrollment Down 11% Nationally as New Work Requirements Take Hold
The federal food stamp program marks 62 years since President Lyndon B. Johnson signed the Food Stamp Act into law on August 31, 1964 — an anniversary landing this year amid the steepest enrollment decline in the program’s modern history, as expanded work requirements and eligibility restrictions passed last year work their way through the system. More than 4 million people lost Supplemental Nutrition Assistance Program benefits between July 2025 and April 2026, according to federal data, with nationwide participation falling from roughly 42 million to 37 million recipients — an 11% decline in less than a year. More recent estimates put the total number of people who have lost benefits since the changes began at over 5 million, with enrollment continuing to decline in every state, according to Lauren Bauer, an economist at the Brookings Institution who tracks the program. The changes stem from the One Big Beautiful Bill Act, the sweeping tax and spending package Congress passed in July 2025. The law significantly expanded SNAP’s work requirements, mandating that more adults prove they are working or volunteering at least 80 hours a month to keep receiving benefits. Groups newly subject to those requirements include veterans, homeless individuals, young adults aging out of the foster care system, parents with children between 14 and 17, and adults between the ages of 55 and 64 — populations that had previously been exempted from SNAP’s work-requirement rules in whole or in part. The law also eliminated federal food aid eligibility entirely for certain categories of noncitizens, including refugees, asylum seekers, and victims of domestic abuse or human trafficking who had previously qualified for assistance regardless of immigration status. The Congressional Budget Office projects that the expanded work requirements alone will reduce SNAP participation by an average of 2.4 million people per month over the 2025-2034 period, a scale of reduction that budget analysts describe as one of the largest deliberate contractions of the program’s reach since its modern form took shape in the 1970s. Children have not been spared: at least 1 million children lost benefits across the 19 states surveyed in one recent analysis, even though most of the new work requirements are aimed at adult recipients rather than families with young children directly. The impact has landed unevenly across the country. Arizona has seen the steepest decline of any state, with enrollment falling to roughly half of the previous year’s level — a drop of more than 400,000 participants. Louisiana, Florida and Oklahoma have also recorded significant enrollment drops as the new eligibility rules and paperwork requirements take hold, according to state-level data reviewed by researchers tracking the rollout. Agriculture Secretary Brooke Rollins has offered a different read on the numbers, attributing the enrollment decline primarily to “a better economy” and arguing that many people leaving the rolls were “taking the program that shouldn’t have been” receiving benefits in the first place — framing the drop as evidence the new work requirements are successfully targeting the program toward those who genuinely need it. Policy analysts studying the data have pushed back on that explanation, noting that unemployment has remained essentially flat over the same period while food prices have continued to rise, a combination they argue points toward the policy changes themselves, rather than a strengthening labor market, as the primary driver of the decline. Beyond the immediate eligibility changes, the law sets up a more structural shift in how SNAP is funded starting in 2027, when states will be required to help cover the program’s costs for the first time in the program’s history. SNAP has historically been funded almost entirely by the federal government, with states responsible mainly for administrative costs rather than the benefits themselves. Tim Shaw, a policy expert at the Aspen Institute, said the new state cost-sharing requirement creates a serious long-term risk for the program’s reach, since most states are legally required to balance their budgets every year and have far less fiscal flexibility than the federal government to absorb a new, potentially large and unpredictable expense. “More than 60 years of food assistance could soon come to an end” in some states, Shaw warned, raising the possibility that a handful of states could eventually scale back their participation in the program altogether once the funding burden shifts. Some states have also begun restricting which specific food items SNAP recipients are permitted to purchase with their benefits, a separate trend that predates the 2025 law but has gained momentum alongside the broader push to tighten the program’s rules. Supporters of those restrictions argue they encourage healthier purchasing patterns among recipients; critics counter that they add administrative complexity for retailers and stigmatize recipients without meaningfully improving nutrition outcomes. Elaine Waxman of the Urban Institute pointed to what she described as one of SNAP’s core historical strengths now under strain: its universality. Before the recent changes, she noted, the program’s defining feature was that “it was available everywhere,” providing a consistent nutritional safety net regardless of which state a family happened to live in. With enrollment now falling unevenly by state and a state-funding requirement looming in 2027, that consistency is increasingly in question, with anti-hunger advocates warning that the practical experience of the program could soon vary dramatically depending on a family’s zip code in a way it has not for most of the program’s 62-year history. Food banks and local charitable networks in several of the hardest-hit states say they have already seen a noticeable uptick in demand as SNAP recipients lose eligibility, though most describe their capacity as strained rather than broken so far. Anti-hunger organizations argue that private charity was never designed to absorb the scale of need that a federal entitlement program covering tens of millions of people is built to address, and they warn that a further wave of state-level funding shortfalls in 2027 could push local food assistance networks well past their sustainable limits. Supporters of the new work requirements counter that a modest transition period of strained…
US-Canada Trade Talks Collapse as Trump Imposes 50% Tariffs, Threatens More on Autos
Trade negotiations between the United States and Canada broke down late Friday, triggering 50% U.S. tariffs on roughly $20 billion worth of Canadian goods and prompting Canadian Prime Minister Mark Carney to declare his country is “at war” economically with its largest trading partner. The tariffs took effect just after midnight Friday into Saturday, August 22, after last-minute talks collapsed. U.S. Trade Representative Jamieson Greer said Canada “declined to finalize the trade deal” and came back with “new demands and walk backs” despite what he called an American offer of “the best treatment of any major exporter.” The new duties hit a range of Canadian products, including dairy, alcoholic beverages, cement and hockey equipment. Carney rejected the U.S. characterization of how talks fell apart. “You’re at war when you get attacked. We got attacked,” he told reporters at a Saturday press conference, arguing that Washington had introduced unfair, last-minute changes that undermined the reliability of any deal. “Canada has what the world wants,” Carney said. “And we will not allow any nation to determine our future.” Canada has announced it will respond with matching, dollar-for-dollar tariffs beginning September 8, targeting American steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics — an attempt to mirror the economic pain on industries and states that export heavily to Canada. The dispute escalated further this weekend when Trump threatened an additional round of 50% tariffs on Canadian cars, trucks, auto parts and steel, this time set to take effect January 1, 2027, unless a deal is reached. Trump urged automakers to shift production to the United States, promising “ZERO TARIFFS” for companies that manufacture domestically. He accused Canada of imposing steep tariffs on American farmers and blamed the imbalance for what he described as a $60 billion U.S. trade deficit with Canada, writing that the current arrangement is “not sustainable, and NOT ANYMORE!” The latest tariffs follow months of on-and-off negotiations. U.S. steel and aluminum tariffs on Canada had already doubled to 50% back in June, and the two countries pledged at the G7 summit in June to reach a broader deal within 30 days — a timeline that slipped after Washington briefly suspended talks in late June before restarting them at month’s end. U.S. officials have downplayed the near-term economic impact on the American side. Greer noted the newly tariffed goods represent roughly 5% of overall Canadian trade and just 0.06% of total U.S. consumption, though he acknowledged the effect “may be different” for Canada, which sends the large majority of its exports south of the border. Economists on both sides of the border are watching how the dispute filters through to consumers. Tariffs on dairy, alcohol and construction materials like cement are likely to show up in retail prices in both countries, while a prolonged standoff over autos and steel — industries deeply intertwined across the two countries’ supply chains — could raise vehicle prices and squeeze manufacturers in the U.S. Midwest and Ontario alike if it drags into 2027. No new talks have been publicly scheduled between the two governments as of this weekend.
Weak Jobs Report Scrambles Fed Rate Bets as Chair Warsh Weighs Inflation Fight
A dismal July jobs report has upended Wall Street’s expectations for next month’s Federal Reserve meeting, complicating new Fed Chair Kevin Warsh’s stated mission of driving inflation back down to the central bank’s 2% target. The Labor Department reported that employers cut 23,000 jobs in July — a surprise contraction economists had not been forecasting — and revised down hiring for May and June by a combined 103,000 positions. The revisions erased much of what had looked like a resilient labor market just weeks earlier. In the wake of the report, the market-implied probability that the Fed holds interest rates steady at its September meeting jumped to 56%, up from 45% the day before, according to federal funds futures pricing. “The chances of holding just went up pretty significantly today,” said Cory Stahle, an economist at the Indeed Hiring Lab, adding that further signs of labor-market deterioration could put rate cuts back on the table in the months ahead. Heather Long, chief economist at Navy Federal Credit Union, struck a more cautious tone about what the data means for the broader economy. “The U.S. labor market is stalling again, and that is going to make the Federal Reserve’s job harder,” Long said. The weak jobs numbers land at a delicate moment for the Fed. Warsh, confirmed by the Senate in May and sworn in as chair later that month after a contentious nomination fight, has made clear that bringing inflation back to target is his top priority — even as the labor market shows fresh cracks. Annual inflation ran at 3.5% in June, well above the Fed’s goal, and forecasters expect the July Consumer Price Index, due out in the coming weeks, to come in only slightly cooler at around 3.4%. That combination — sticky inflation alongside a softening job market — is exactly the bind the Fed has spent much of the year trying to avoid. Some economists argue the inflation numbers still leave room for the Fed to keep policy tight, or even raise rates further. Bank of America economists are sticking with a call for a 0.75 percentage point rate hike before the end of the year, arguing that Warsh’s Fed is unlikely to ease up on inflation just because hiring has cooled. Others see it differently. If August’s jobs and inflation data confirm the July slowdown wasn’t a one-off, analysts say the Fed could pivot toward cuts to avoid tipping the economy into a deeper slump. For now, though, the September meeting looks far less like a lock for a hike than it did a week ago, with traders and economists alike bracing for a “wait and see” approach from Warsh’s Fed. For consumers, the uncertainty cuts both ways. A prolonged hold or a hike would keep borrowing costs — mortgages, auto loans, credit cards — elevated for longer. A weaker labor market, on the other hand, raises the risk of slower wage growth and softer hiring heading into the fall, even as prices at the register remain stubbornly above the Fed’s comfort zone. The Fed’s next policy meeting is scheduled for September, and officials will have a fresh round of jobs and inflation data in hand before making their call.
National Debt Crosses $40 Trillion for First Time Ever, Doubling in Less Than a Decade
The federal government’s total debt surpassed $40 trillion this week for the first time in American history, a milestone that arrived just five months after the debt crossed $39 trillion in March — underscoring the breakneck pace at which Washington continues to add to the national credit card even as interest payments alone now exceed $1 trillion a year. The Numbers Treasury Department data released Wednesday showed total public debt outstanding at $40.047 trillion as of the close of business Tuesday, made up of $32.266 trillion in Treasury securities held by the public and $7.782 trillion in intragovernmental debt holdings. The debt has now more than doubled in less than a decade — it stood at $19.95 trillion when Trump was first sworn into office in January 2017, meaning the figure has grown by roughly $20 trillion in less than nine years, spanning both the Trump and Biden administrations. The pace of accumulation has been remarkably consistent regardless of which party controlled Washington: the debt reached $38 trillion in October of last year, hit $39 trillion just five months later in March, and has now crossed $40 trillion only five months after that — a rhythm of roughly one trillion dollars in new debt added every five months. Where the Money Is Going Federal officials and budget analysts point to a combination of factors driving the surge: rising costs for Social Security and Medicare as the population ages, elevated defense spending tied in part to the nearly six-month-old war with Iran, and — critically — the cost of simply servicing debt that’s already been accumulated. Interest payments on the debt now exceed $1 trillion annually, meaning the government is spending more on interest alone than it does on national defense, according to Treasury figures. Roughly a third of the total increase in debt over the past decade occurred during the two years immediately following the COVID-19 pandemic, when emergency spending surged across both parties. The gap between what the government spends and what it collects in tax revenue now runs more than $2 trillion a year, according to the latest Treasury projections — meaning the debt will almost certainly continue climbing at a similarly rapid clip barring a significant change in fiscal policy from Congress. Watchdogs Sound the Alarm Fiscal watchdog groups across the political spectrum have grown increasingly vocal about the trajectory. Michael Peterson, CEO of the nonpartisan Peter G. Peterson Foundation, warned that current trends put the country on pace to reach $50 trillion in debt within just six years. “On our current path, we’re going to be at $50 trillion in just six years,” Peterson told CNN. “If you look backward, we were at $20 trillion less than 10 years ago. We’re really putting our economy and our country’s future in jeopardy.” The nonpartisan Congressional Budget Office had projected the debt wouldn’t cross $40 trillion until 2027 under its baseline scenario — meaning the milestone arrived notably ahead of even that relatively pessimistic prior projection. Under the CBO’s own faster growth-rate scenario, the debt could reach $50 trillion by 2030. Investors Are Taking Notice The scale of the debt is beginning to show up in how markets price U.S. government borrowing. Investors purchasing U.S. Treasury bonds have started demanding higher interest rates to compensate for the growing debt burden, according to NPR reporting — a dynamic that pushes up borrowing costs not just for the federal government but, indirectly, for everyday Americans as well, since Treasury yields serve as a benchmark for mortgage rates, auto loans, and other consumer borrowing costs across the broader economy. A Bipartisan Problem, A Politically Charged Moment Notably, the debt’s rapid growth spans administrations of both parties, having roughly doubled across a stretch that included Trump’s first term, the Biden administration, and now Trump’s second term — a fact that complicates any effort to assign blame to a single party or administration. Republican fiscal hawks in Congress, including Rep. Jodey Arrington of Texas, have used the milestone to renew calls for spending caps, stronger fiscal reform measures, and a serious effort to rein in government waste, arguing that neither party has shown the political will to seriously address the underlying structural drivers of the debt — chiefly the growth of mandatory spending on entitlement programs and defense. Iran’s foreign minister, notably, seized on the $40 trillion milestone this week to counter President Trump’s fresh round of economic pressure against Tehran, arguing that America’s own debt crisis undercuts its standing to lecture other countries on economic mismanagement — a reminder that the debt figure has become fodder in the broader geopolitical messaging war as well as a purely domestic fiscal concern. What Happens Next With government spending continuing to outpace revenue by more than $2 trillion annually and no major bipartisan deficit-reduction effort currently underway in Congress, the debt appears set to continue its rapid climb toward the next milestone. Given the pattern established over the past year — roughly a trillion dollars in new debt every five months — the country could plausibly cross $41 trillion by early 2027, absent a significant shift in fiscal policy from either the White House or Capitol Hill. This story is developing.
Retail Sales Post Worst Drop in Over a Year as Consumer Sentiment Sours, Even With Wall Street Near Record Highs
American consumers pulled back on spending more sharply than at any point in over a year this July, according to fresh Commerce Department data released Friday, complicating the otherwise upbeat narrative Wall Street has been telling itself throughout a summer defined by record stock highs and cooling wholesale inflation. What the Data Showed Headline retail sales fell 0.6% in July, badly missing economist expectations of a modest 0.1% gain — the steepest monthly decline the Commerce Department has recorded in more than a year. The disappointing figure landed just as a separate reading on consumer attitudes told a similarly downbeat story: a preliminary University of Michigan survey showed consumer sentiment for August declined from the previous month, with inflation remaining top of mind for American households even as official inflation readings have generally trended in a more favorable direction throughout the summer. The combination caught markets’ attention specifically because it arrived on the heels of a string of encouraging inflation data. The Producer Price Index for July came in essentially flat on a monthly basis, with core PPI — stripping out food and energy — rising just 0.2%, both readings that were broadly in line with or slightly better than economist forecasts and a meaningful improvement from June’s revised figures. That benign inflation data had helped push major stock indexes to fresh highs earlier in the week, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closing higher Thursday as investors grew more confident the Federal Reserve would hold off on a rate hike at its September meeting. A Market Caught Between Two Narratives The tension between cooling inflation and softening consumer spending puts investors in a genuinely tricky spot heading into the fall. On one hand, easing wholesale price pressures reduce the odds of the Fed tightening policy further, which is generally good news for stock valuations and borrowing costs alike. On the other, a sharp pullback in retail spending — traditionally one of the most reliable real-time signals of underlying economic health, given that consumer spending makes up roughly two-thirds of U.S. economic activity — raises legitimate questions about whether American households are beginning to genuinely tighten their belts rather than simply benefiting from moderating price growth. Energy stocks were a notable bright spot amid the mixed data, with the sector on pace for a weekly gain of roughly 7%, helped along by oil prices that ticked higher even amid otherwise low-volume, typical late-summer trading conditions. Communication services also led broader market gains for the week. Individual Earnings Still Delivering Strength Even as the macro picture grew more complicated, individual company earnings continued to provide plenty of positive headlines. Industrial battery maker EnerSys reported quarterly earnings of $3.66 per share, sharply ahead of both the prior year’s $2.08 and the consensus estimate of $2.82, sending shares up 5.7%. Shipping giant A.P. Møller-Mærsk posted an even more dramatic beat, with earnings of 45 cents per share against a forecast of just 21 cents, and revenue of $15.76 billion coming in nearly 8% above expectations — pushing its shares up 9.6% on the day. Not every earnings report landed well, however. Optical retailer National Vision saw its shares tumble 6% after full-year guidance came in below what Wall Street had been hoping for, and infrastructure and engineering firm Aecom dropped a similar amount after posting revenue down roughly 14% year-over-year, well short of analyst forecasts for its Americas segment specifically. What’s Coming Next Week Markets are bracing for what could be a pivotal stretch of earnings reports that will help clarify whether Friday’s disappointing retail sales figure was a genuine warning sign or simply a one-month blip. Major retailers including Target and Walmart are scheduled to report results in the coming days, giving investors a much more direct read on the health of American consumer spending than the aggregate government data alone can provide. Chipmaker Nvidia’s highly anticipated earnings report, due later this month on Aug. 26, will offer a separate but equally closely watched signal on whether the AI infrastructure investment boom that has powered much of this year’s market gains still has room to run. The Bigger Picture Supporters of the administration’s economic approach point to still-strong corporate earnings, a resilient AI-driven investment cycle, and continued progress on wholesale inflation as evidence that the fundamentals of the economy remain sound, arguing that a single soft retail sales report shouldn’t overshadow months of broader economic strength. Others note that declining consumer sentiment alongside weaker-than-expected spending, even amid genuinely encouraging inflation data, suggests many American households continue to feel real financial strain despite the more favorable headline economic numbers — a disconnect between Wall Street’s performance and Main Street’s day-to-day experience that has persisted through much of the past year and shows few signs of fully resolving itself. This story is developing.
Inflation Comes in Tame, Stocks Near Record Highs as Wall Street Bets the Fed Stays on Hold
Wall Street pushed toward fresh record territory Wednesday after the government’s July inflation report landed almost exactly in line with what economists expected, easing fears of an imminent Federal Reserve rate hike and giving investors renewed confidence that strong corporate earnings can keep carrying markets even amid ongoing uncertainty over energy prices tied to the Iran conflict. What the Inflation Data Showed The Consumer Price Index rose 0.1% month-over-month in July, while core CPI — which strips out volatile food and energy prices — came in at 0.2%, matching consensus estimates almost precisely. That in-line reading was enough to ease near-term rate-hike anxiety that had been building in the market in recent weeks, even though the report technically showed inflation running slightly hotter than the previous month on both a monthly and annual basis. The reaction in bond markets was immediate. The 2-year Treasury yield, which is especially sensitive to near-term Fed policy expectations, dropped 4 basis points to 4.17%, while the benchmark 10-year Treasury yield similarly fell 4 basis points to settle at 4.65%. Following the release, futures markets pricing in the odds of a Fed rate hike at the September meeting dropped to around 44%, down from roughly 48% just the day before — a meaningful, if not dramatic, shift in how traders are positioning for the central bank’s next move. Stocks Push Toward Records Major indexes responded positively. The S&P 500 climbed toward a fresh record, up roughly 0.5% on the session, while the Dow Jones Industrial Average gained about 150 points and the Nasdaq 100 rose nearly 1%. The moves came against a backdrop of what analysts have described as a relatively quiet summer trading environment overall — thin volume, narrow daily index swings, and a tapering flow of second-quarter earnings reports as that season winds down. Gold also caught a bid on the softer yield environment, with futures pushing above $4,500 an ounce for the first time since early June, extending a roughly 14% rally over just the past three weeks as investors sought safe-haven positioning amid the mix of geopolitical and monetary policy uncertainty. AI and Chip Stocks Lead the Charge Beyond the macro data, strong individual earnings reports provided plenty of their own momentum. Cloud infrastructure company CoreWeave surged as much as 20% in premarket trading after posting stronger-than-expected sales results, while server maker Super Micro Computer advanced nearly 10% on a revenue forecast that beat analyst expectations. The strength extended overseas as well, with strong results from Chinese tech giant Tencent lifting sentiment for hyperscalers and chip producers more broadly, and Singapore’s sovereign wealth fund Temasek reportedly taking fresh stakes in memory chipmakers SK Hynix and Samsung. The AI infrastructure trade has been a defining theme of markets throughout the summer, and Wednesday’s data suggested that momentum remains firmly intact even as some analysts have periodically raised questions about the sustainability of the sector’s valuations. Bank of America analysts reiterated a buy rating on Nvidia in recent sessions, telling clients the chipmaker’s shares remain cheap relative to its growth trajectory and dismissing broader circular-financing and memory-supply concerns that had briefly weighed on sentiment as “overblown.” The Complicating Factor: Oil and Iran Not every signal pointed toward smooth sailing. Oil prices have remained choppy and elevated throughout the week, with markets closely tracking mixed signals coming out of ongoing U.S.-Iran negotiations over reopening the Strait of Hormuz to normal shipping traffic. Brent crude for October delivery gained more than 1% earlier in the week to trade near $84.42 a barrel, with traders citing uncertainty over whether a deal to fully reopen the strait is likely to materialize on the timeline some administration officials have suggested. That energy uncertainty is a genuine wildcard for the inflation outlook going forward. Analysts have noted that higher oil prices feed directly into fuel and transportation costs, which could complicate the Fed’s calculus in the months ahead even if this particular CPI report came in benign. As one market strategist put it in commentary following the report, “While the report was better, high inflation remains a frustration for Americans” — a reminder that even a reading matching expectations doesn’t necessarily mean the inflation fight is fully behind the economy. A Divided Fed Heading Into Its Next Decision The muted, in-line CPI print is likely to do little to resolve what analysts describe as a genuinely divided Federal Reserve heading into its next policy decision. Fed officials had signaled back in July that they would need to see continued improvement in core inflation between now and their next meeting in order to justify holding off on a rate hike — meaning Wednesday’s data, while not alarming, also wasn’t dramatic enough to definitively settle the internal debate at the central bank. The Fed will have additional data points to weigh before its September meeting, including the Producer Price Index due out the following day and a full August employment and inflation picture still to come. What It Means for Everyday Americans For consumers, the practical upshot of Wednesday’s report is a mixed bag. A tame, in-line inflation print is generally reassuring news for financial markets and reduces (without eliminating) the near-term risk of another Fed rate hike that would make borrowing even more expensive for everything from mortgages to auto loans to credit cards. At the same time, the persistence of elevated energy prices tied to the unresolved Iran situation, along with a 10-year Treasury yield still sitting close to 4.7%, means many of the affordability pressures households have felt over the past year — particularly around borrowing costs — aren’t going away simply because one month’s inflation report came in as expected. The Bigger Picture Supporters of the administration’s broader economic approach point to the combination of strong corporate earnings, a still-resilient AI-driven investment boom, and inflation that continues moving in a generally favorable direction as evidence that the economy remains fundamentally sound even amid genuine geopolitical headwinds. Skeptics counter that markets sitting near record highs alongside elevated…
25 Blue States Sue to Block Trump’s Latest Tariffs, Setting Up Third Round of Legal Battles
A coalition of 25 Democratic-led states filed suit against the Trump administration this week over its newest round of tariffs, marking the third time in less than two years that blue-state attorneys general have gone to court to challenge the president’s trade agenda — and setting up yet another high-stakes legal showdown over just how far a president’s tariff authority actually extends. What the Lawsuit Targets The lawsuit, filed Monday in the U.S. Court of International Trade, takes aim at tariffs the administration announced on July 23, imposing duties of 10% to 12.5% on goods from more than 80 trading partners, including the European Union. The stated justification for the new levies was different from the administration’s earlier tariff push: rather than citing a national trade deficit emergency, the U.S. Trade Representative’s office said the tariffs were necessary because the targeted countries had failed to adequately ban and enforce prohibitions on imports made with forced labor. The states argue that rationale doesn’t hold up. The lawsuit, filed under Section 301 of the Trade Act of 1974, alleges the tariff action was “arbitrary, capricious, and contrary to law,” and claims that public comments and testimony gathered by the USTR actually undercut the forced-labor justification rather than support it. New York Attorney General Letitia James, who has led the multistate coalition through all three rounds of tariff litigation, didn’t hold back in her public response. “After losing at the Supreme Court, the administration is once again trying to illegally raise taxes on families and businesses with a new round of tariffs,” James wrote. “The president doesn’t have the power to impose sweeping tariffs.” A Familiar Legal Fight, Third Time Around This is not new legal territory for either side. The same coalition of states first sued the administration back in April 2025, arguing that Trump’s use of the International Emergency Economic Powers Act, or IEEPA, to impose sweeping “Liberation Day” tariffs on nearly every country in the world was unlawful. That argument found real traction: in February, the Supreme Court agreed, ruling that IEEPA simply doesn’t authorize the president to impose tariffs of that scope, forcing the administration to issue refunds to importers who had already paid the disputed duties. Rather than abandon its tariff strategy after that defeat, the administration pivoted to a different legal justification. It invoked Section 122 of the Trade Act of 1974 to impose temporary 10% tariffs on most imported products, arguing that statute gave it the necessary authority. States sued again, and in May, the U.S. Court of International Trade ruled that those tariffs, too, were unlawful. Now, with the clock having run out on that temporary tariff regime, the administration has turned to yet a third legal basis — Section 301 — to justify its latest round of duties. Unlike the two previous statutes at issue, Section 301 has a somewhat sturdier legal track record: Trump used it during his first term to impose significant tariffs on China, and those survived court challenges at the time. Whether that precedent will hold up against this newest and much broader application, covering dozens of countries rather than a single trading partner, is now squarely in the hands of the Court of International Trade. The States Involved Joining New York in the latest lawsuit are Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Virginia, Vermont, Washington, and Wisconsin — a coalition made up entirely of Democratic attorneys general, continuing the partisan pattern that’s defined all three rounds of tariff litigation so far. The Administration’s Defense White House officials are standing firmly behind the legal basis for the new tariffs. White House spokesperson Kush Desai defended the administration’s approach in a statement, arguing that “the United States is using its lawful authority to obtain the elimination of unreasonable acts, policies, and practices that burden U.S. commerce.” Desai further argued that Section 301 tariffs have “proven to be a legally durable tool since the president’s first term, and they remain so now” — a direct reference to the tool’s successful track record surviving legal challenges during Trump’s earlier term in office. Supporters of the administration’s broader trade strategy argue that repeated legal setbacks on specific statutory grounds don’t undermine the underlying policy goal: using tariffs as leverage to address unfair trade practices, protect American manufacturing, and hold foreign governments accountable for labor and environmental practices that put U.S. businesses at a competitive disadvantage. From that view, the administration’s willingness to pursue tariff authority through multiple different legal avenues — rather than abandoning the strategy after the IEEPA and Section 122 defeats — reflects persistence in pursuing a policy priority that voters supported at the ballot box, not a legal end-run around the courts. Why This Round May Be Different There’s an argument that the forced-labor justification behind these newest tariffs gives the administration firmer legal footing than its previous attempts. Unlike the emergency-powers rationale that the Supreme Court rejected, Section 301 is specifically designed by Congress to let the executive branch respond to unfair trade practices identified through a formal investigative process — precisely the kind of process the USTR says it followed here. Whether that process holds up to judicial scrutiny, particularly the states’ claim that the USTR’s own gathered evidence undercuts its stated rationale, will be the central question as the case moves forward. What Happens Next The lawsuit asks the Court of International Trade to both block enforcement of the new tariffs going forward and order refunds for duties already collected under the Section 301 action — the same remedy states won in their first successful challenge earlier this year. Given the pattern of the previous two cases, expect an expedited briefing schedule and likely appeals regardless of which side prevails at the trial court level, keeping the fate of a significant chunk of the administration’s trade policy tied up in litigation for months to come. For American businesses and…