As the US economy continues to show incredible resilience, withstanding all the chaos around President Trump’s tariffs. One possible reason for the recent drop in the “sell America” trade is precisely because of this economic resiliency. Businesses and consumers alike are registering their confidence in our domestic stability. Consequently, the US dollar has returned to being the default safe haven for investors.
Combined with recent policy, it seems as though the labor market is rebounding rapidly. New claims for unemployment benefits are down for the fourth straight week. For the week ending on July 5th, claims fell off a cliff. They hit a close to two-month low of 227,000, which was down from 232,000. Further, the strong labor market gives people even more confidence that the economy will remain stable, continuing to feed into a positive outlook.
The Federal Reserve (Fed) will have to make some tough calls at their next meeting which is set for later this month. In fact, the minutes from the June FOMC meeting reiterated the vigor of the jobs market. Some members resisted going along with rate cuts for 2025. Two members are clearly still willing to consider a rate cut as early as the July meeting.
The US economy is booming—unfazed by the persistent trade storm brewing in the distance. Despite President Trump’s imminent August 1st deadline for finalizing new trade deals, it is still going strong. The Fed’s hawkish posture suggests it’s seen and surprised by this resilience, and that it doesn’t feel pressure to rush into rate cuts. Dollar skeptics will be watching with a hawk’s eye to see how the dollar reacts if President Trump again threatens to walk away from trade negotiations.
The decrease in the “sell America” trade reflects broader economic confidence, suggesting that businesses are less inclined to offload their American assets despite tariff pressures. The country’s incredibly tight labor market that boost attracts investment and consumer spending like a magnet. This rosy outlook is supported by strong economic fundamentals.
As the Fed looks forward to its next meeting, most analysts will be looking intently at this one. This will include an assessment of how the bank has adapted to today’s economic climate. It will determine what, if any, changes to interest rates to make. The tense relationship between labor market statistics, the Consumer Price Index, and the state of international trade will loom large over these decisions.