tl;dr
UBS analysts report a slowdown in the US economy, with real GDP growth at 1.2% annualized in the first half of 2025, down from previous years. The July employment report showed only 73,000 new jobs, below expectations, and a decline in labor force participation masks labor market weakness. UBS dispu...
Research analysts at UBS, Switzerland's largest bank, report a noticeable slowdown in the US economy. Their recent analysis reveals that real gross domestic product (GDP) growth has decelerated to an annualized rate of just 1.2% in the first half of 2025, a significant drop compared to the previous two years.
The analysts highlight last week's subdued employment report from the U.S. Bureau of Labor Statistics, which recorded an increase of only 73,000 nonfarm payroll jobs in July, falling short of the 100,000 jobs expected by Dow Jones estimates. UBS contends that a decline in the labor force participation rate has obscured the true extent of labor market weakening.
Contrary to Federal Reserve Chair Jerome Powell’s recent remarks attributing slowed population and labor force growth to reduced immigration, UBS points to data from both the Household and Establishment Surveys that suggest the labor market is indeed loosening, and that population growth is not actually slowing.
Furthermore, UBS predicts that tariffs imposed under President Donald Trump will shave off between 0.1 to 0.2 percentage points from U.S. economic growth over the upcoming year. The financial institution anticipates the Federal Reserve will reduce interest rates by 25 basis points in September, with the possibility of further cuts totaling up to 100 basis points by the end of 2025.