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
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