U.S. Economy Slows Down, According to UBS, Prompting Anticipated Action from the Federal Reserve, Claims a Recent Report
In August 2025, UBS predicts a clear slowdown in the US economy, characterised by fading domestic momentum, much slower job growth, and the shadow of escalating tariffs that could further dampen the outlook[1]. The economy is growing at an annualized rate of 1.2% in the first half of 2025, a significant drop from previous years' growth rates, with quarter-over-quarter figures showing weakening domestic demand[1].
Labor market strength has deteriorated substantially. Nonfarm payroll additions dropped sharply, with July seeing only 73,000 new jobs and a three-month average gain of just 35,000 jobs per month – levels described as "stall speed" by Federal Reserve officials[1]. The unemployment rate rose to 4.25%, the highest since 2021, with broader labor underutilization measures also increasing[1].
Inflation pressures are expected to intensify into autumn 2025, driven by tariff impacts that are pushing up core goods and services inflation. Core CPI is projected to rise by 0.35% month-over-month in July, with higher increases expected through the fall months[2]. Tariffs are a key factor in rising inflation, especially in core goods inflation, which is forecasted to reach around 0.60% to 0.76% monthly in August and September[2]. Core services such as airfares and lodging are also expected to rebound after prior declines[2].
Equity market outlook is cautious for the near term. UBS predicts a 15% drop in the S&P 500 by the end of 2025, despite raising 2025 and 2026 year-end price targets based on expectations of US economic resilience and a weak dollar in the longer term[3]. UBS strategists warn the recent market rally could stall due to weak economic data and slowing growth, suggesting August 2025 might be a down month for equities[4].
UBS assesses the US economy in August 2025 as entering a demand-driven slowdown with lower growth and employment gains, rising inflation pressures due to tariffs, and increasing economic uncertainty impacting markets[1][2][3][4]. They expect the Federal Reserve will likely take action soon to ease the landing amid persistent tariff uncertainty and slowing momentum[1][5].
Meanwhile, in the world of cryptocurrency, an on-chain analyst predicts that Bitcoin is on the cusp of entering the Euphoria phase as the 'bulletproof' bull market expands[6]. Elsewhere, a JPMorgan Chase employee accidentally unfreezing scammer's stolen money led to a $20,000 loss for an Arizona couple[7].
References: [1] UBS Global Economics and Markets Research, U.S. Economy: Slowdown Phase, August 2025 [2] UBS Global Economics and Markets Research, U.S. Inflation: Intensifying Pressures, August 2025 [3] UBS Global Equity Research, U.S. Equity Market Outlook: Cautious Near Term, August 2025 [4] UBS Global Equity Research, U.S. Equity Market Outlook Update: Weak Data and Slow Growth, August 2025 [5] UBS Global Economics and Markets Research, Federal Reserve: Easing the Landing, August 2025 [6] CoinDesk, Bitcoin Enters Euphoria Phase, On-Chain Analyst Says [7] Arizona Republic, JPMorgan Chase Employee's Error Leads to $20,000 Loss for Arizona Couple
- Amidst the slowdown in the US economy, investors might want to consider the potential of diversifying their portfolios with cryptocurrencies, as Bitcoin is predicted to enter the Euphoria phase, marking a significant stage in its bull market.
- Concurrently, the business world, including financial institutions, is grappling with the intensifying inflation pressures due to escalating tariffs, which could potentially impact the overall performance of traditional asset classes like stocks, while cryptocurrencies such as altcoins might offer alternative investment opportunities.
