U.S. Economy Expands 3% Q2 Amid Weak July Jobs, Manufacturing Declines

Recent U.S. economic data presents a mixed picture, with the economy growing 3.0% in Q2 2025 but July's labor market showing significant weakness. Job creation in July was only 73,000, well below expectations, and revisions to prior months indicate the job market is weaker than initially reported, with payrolls averaging just 35,000 over the last three months. Manufacturing employment and government jobs declined, and the unemployment rate rose slightly to 4.2%, accompanied by a drop in labor force participation. These labor market strains coincide with President Donald Trump's aggressive tariff policies, which have raised import tariffs to the highest levels since the 1930s, contributing to a sharp decline in U.S. imports and affecting supply chains. Despite these challenges, consumer sentiment improved slightly and inflation expectations eased, though manufacturing activity contracted, signaling ongoing industrial softness. In Europe, inflation remains modest and stable near the European Central Bank's target, and labor markets show resilience with only slow hiring growth and signs of hiring fatigue, reflecting a stable but subdued economic environment.