America’s Slowdown is Self-Inflicted

By Sanjeev Oak

America’s economic slowdown is no accident. Tariffs, incoherent policies and political theatrics have weakened growth, jobs and consumer confidence. Hard data flagged by Fitch shows inflationary strain and faltering demand—Washington’s missteps now threaten not just the U.S. but global stability.

The American economy, long hailed as the global engine, is now caught in turbulence of its own making. For all the rhetoric of “rebuilding America” and “reshoring manufacturing,” the United States finds itself staring at a slowdown marked by weak job creation, softening consumer demand and eroding confidence.

This is not merely a cyclical cooling after pandemic volatility. It is the direct outcome of a set of policy missteps—tariffs that backfired, erratic fiscal choices and political theatre substituting for coherent economic direction. And the hard data now confirms it. Fitch Ratings has warned of weakening job growth, slowing consumer spending and inflationary pressures compounded by tariffs.

Tariffs: From Shield to Shackle

When Washington imposed fresh tariffs under the banner of protecting domestic industry, the promise was of revival. American factories would hum again, jobs would return and unfair competitors would be kept at bay.

Instead, businesses scrambled to front-load imports before tariffs took effect. That surge paradoxically subtracted from GDP growth, pushing the economy into contractionary territory. Far from signalling resilience, the headline figures exposed the policy’s unintended consequence: tariffs became a tax on growth rather than a spur to it.

“Tariffs promised revival; they delivered distortions, higher costs and slower growth.”

Fitch’s latest warning is blunt: higher tariffs are translating directly into inflation and weakening consumer demand. The protectionist walls meant to shelter workers are instead squeezing household budgets. For the middle class, tariffs have become invisible but persistent taxes.

The Labour Market Mirage

Until recently, the labour market was touted as America’s bright spot. But that veneer is cracking. Payroll gains are anaemic, and revisions show nearly a million jobs once thought to exist simply vanished on adjustment. This is not a rounding error; it is a recalibration that undermines the claim of “robust employment.”

“The labour market’s glow was statistical, not structural.”

Fitch underscores the same weakness: job creation is slowing, wage growth is flattening, and sectors tied to consumer demand—retail, leisure, manufacturing—are showing fatigue. A slowing job market, coupled with tariff-driven inflation, cuts at the very heart of America’s growth model: consumption.

Consumers on Edge

The American consumer has long been the stabiliser of the global economy. But disposable incomes are under stress from rising prices. Everyday costs—groceries, rents, fuel—creep upward. Consumer confidence surveys show persistent caution. And as Fitch underlines, slowing demand is no longer anecdotal; it is measurable.

“When households tighten belts, economies lose momentum.”

If this trend persists, the U.S. economy faces a vicious cycle: weaker consumption leads to softer growth, which pressures companies to cut hiring and investment, deepening the slowdown.

The Perils of Policy Incoherence

Beyond tariffs and inflation, perhaps the most corrosive factor is the lack of policy coherence. The administration oscillates between nationalist protectionism and rhetoric about innovation-led growth. One day it touts tariffs as the solution, the next it promises technological transformation through AI, green energy and semiconductors.

What businesses need is predictability. Instead, they are left guessing which version of Washington will show up tomorrow: the tariff-enforcer or the tech-evangelist.

“Markets can price risk; what they cannot price is chaos.”

The result is hesitation. Firms delay investment, investors demand premiums for uncertainty, and global partners quietly hedge against American unreliability.

Political Theatre, Economic Cost

The economic malaise is inseparable from America’s political dysfunction. Policy choices are shaped by electoral optics rather than long-term prudence. Tariffs and fiscal theatrics make for good headlines, but they erode fundamentals.

The politicisation of data—celebrating statistics when convenient, dismissing them when not—chips away at institutional credibility. Confidence in agencies and policy stability is the bedrock of capitalism. To weaken it for short-term gain is reckless.

“Political theatre may rally voters; it cannot sustain economies.”

Global Reverberations

Because the U.S. is the anchor of global demand, its weakness ripples outward. Export-driven economies in Asia, capital markets in Europe, and commodity producers in Latin America all feel the tremors.

For India and other emerging markets, the lesson is clear: Washington’s policy missteps underscore the dangers of over-dependence on a single growth engine. Diversification of trade partners and strengthening domestic consumption are not optional—they are necessary buffers against American unpredictability.

What Washington Must Do

Course correction is possible, but requires political will.

• Tariffs must be recalibrated to target genuine unfair practices, not applied as blunt instruments.
• Fiscal policy should focus less on giveaways and more on productivity-enhancing investments in infrastructure, education and technology.
• Institutional credibility must be restored by respecting independent agencies and offering consistent signals.

“Recalibration, not rhetoric, should be Washington’s watchword.”

Without such steps, America risks sliding into diminished growth, fractured credibility and weakened global influence.

The Editorial Verdict

The irony is sharp: in trying to project strength, Washington has engineered weakness. Tariffs meant to shield workers have exposed them to new vulnerabilities. Fiscal bravado has widened deficits without boosting productivity. Political posturing has hollowed out trust.

The world’s largest economy has weathered downturns before, often through innovation and adaptability. But resilience is not automatic; it is earned through sound policy and credible leadership. The sooner American policymakers grasp that, the less painful the adjustment will be.

Until then, the slowdown remains not an accident of history, but a consequence of hubris.

Why This Matters

• Hard data confirms slowdown: Fitch warns of weakening jobs, rising inflation and slowing consumer spending.
• Tariffs backfired: Instead of revival, they raised costs, cut growth and hit households.
• Confidence erosion: Policy incoherence fuels uncertainty for businesses and markets.
• Global impact: America’s weakness ripples into Asia, Europe and beyond.