US Economy Is Slowly Grinding to a Halt, Kelly Says

Economic Overview - The current economic environment shows a mixed outlook, with bond markets responding positively while equity futures remain largely unchanged, indicating uncertainty in the stock market [1] - Labor market data is concerning, with an emphasis on unemployment claims suggesting a potential slowdown in the labor market, despite some claims data possibly overstating the weakness due to seasonal adjustments [2][6] Inflation Insights - Recent Consumer Price Index (CPI) data indicates a rise in airline fares by 5.9% month-over-month and a 2.4% increase in motor vehicle repair costs, reflecting ongoing inflationary pressures [3][7] - The economy is described as gradually slowing down while inflation continues to rise, which aligns with expectations regarding the impact of tariffs on growth and inflation [8] Labor Market Dynamics - The labor market is characterized by a significant reduction in labor supply, complicating the narrative of weakness, as businesses are hesitant to hire amid uncertainty regarding future tariffs [10][11] - There is a belief that the reduction in payroll growth does not fully capture the labor market's strength, as it remains challenging for businesses to find qualified candidates [9][10] Future Economic Stimulus - Anticipated tax cuts and changes in withholding schedules are expected to provide a substantial stimulus effect in early 2026, with average tax refunds projected to exceed $4,000 for 70% of households, acting as a significant economic boost [12][14][15] - This influx of tax refunds is viewed as a potential buffer against recession in the first quarter of 2026, despite expectations of economic slowing in the fourth quarter of 2025 [15]