When the Trump administration made it clear that its global trade policy was going to rely heavily on tariffs, some economists warned that inflation was likely to increase and economic growth was likely to decrease. For months, the naysayers were proved wrong as economic numbers remained strong. Many companies elected to reduce profits rather than pass on the cost of tariffs to consumers and consumers remained active stockpiling goods before tariffs took a toll.

The latest economic figures, however, indicate the recession chickens may finally be coming home to roost. Journalists Rachel Wolfe and Justin Lahart report, “After months of uncertainty, July’s job’s report is clear: The U.S. economy is beginning to show signs of slowing.”[1] To be fair, it’s not just tariffs weighing heavily on the economy. Wolfe and Lahart explain, “A perfect storm of changes is keeping business leaders cautious. Tariffs are weighing on manufacturing. Workplace raids are hurting immigrant-dependent sectors like landscaping and meatpacking. And cutbacks to the federal workforce are squeezing government hiring.”

One other factor that Wolfe and Lahart didn’t mention is the effect artificial intelligence (AI) is having on the labor market. In a recent email, journalist Thomas Loftus reported, “It might be too early to fully describe AI's role in all of this, but some chief executives have grown increasingly comfortable touting shrinking headcounts while chalking up AI wins.”[2] He added, “Although GDP rebounded in the second quarter, closely watched sales to consumers and businesses came in at their weakest since late 2022. Another survey showed manufacturing activity contracted in July for a fifth consecutive month, with respondents citing greater uncertainty and President Trump’s tariffs.”

The Anxious Consumer

For decades American consumers have been the engine powering the U.S. economy. Analysts from U.S. Bank explain, “Consumer expenditures account for approximately two-thirds of U.S. economic activity, making Americans’ continued spending ability crucial to the nation’s ongoing economic expansion.”[3] They add, “While signs appeared that consumers might be slowing activity, to this point, they continue to play a prominent role in propping up the economy. The central question now is how long consumers can sustain the economy’s positive momentum. Labor market strength is key.” That’s why June’s labor numbers were so concerning.

Just as concerning as job numbers are consumer sentiments. According to freelance writer Eve Upton-Clark, many social media influencers are now encouraging consumers to tighten their purse strings. She writes, “Tightening the purse strings is now in vogue as concerns about tariffs, inflation, job security and market volatility prompt many to pare back their spending, increase their savings, and, naturally, post about it on social media. … ‘No Buy July,’ is the latest, catchier, iteration of the ‘no-spend’ challenges that have been around for years. The idea is simple: use the money you’d spend on takeaway coffee and other small indulgences to pay down debt, build up savings, or reach some other financial goal. Bonus points if you post about it on social media for added accountability.”[4] Upton-Clark also reports that a recent Santander Bank survey found “40% of Americans are more worried about emergency savings than at the start of the year, with 50% concerned about a recession and 53% about inflation. At the same time, the average length of unemployment is now over five months, one month longer than it was last year.”

While saving money and sticking to a budget are great ideas, catchy trends, like “No Buy July,” are not sustainable. Consumers have to buy things to survive. What they buy, however, can change. Journalists Katherine Hamilton and Natasha Khan report, “Americans are back on the hunt for a good deal.”[5] They add, “After spending lavishly through the post-pandemic years on everything from home improvement to travel, U.S. consumers find themselves in a summer of economic uncertainty. … Shoppers, wary about inflation, job expectations and their personal finances, are dialing down their spending to focus on the essentials and forego the extras.”

The Way Ahead

One of the brighter spots in a dimming economic picture is artificial intelligence. Journalist Gerrit De Vynck reports, “Big Tech’s unprecedented spending spree on artificial intelligence is getting so big that it’s starting to reshape the U.S. economy. Google, Meta, Amazon and Microsoft reaffirmed this past week that they are on track to spend more than $350 billion this year building and equipping AI data centers — a massive influx of money that economists and analysts say could be a countervailing force to what appears to be a decelerating economy.”[6] Callie Cox, a market strategist with investment firm Ritholtz Wealth Management, told De Vynck, “The AI complex seems to be carrying the economy on its back now. In a healthy economy, consumers and businesses from all backgrounds and industries should be participating meaningfully. That’s not the case right now.”

Obviously, to stay in business, companies need to contribute to the economy in a “meaningful” way. To do that, they need to be adaptable. To adapt properly, enterprises need to understand where the economy is headed, what consumers are buying, and what decisions need to be made to remain viable and successful. To help businesses do that, Enterra Solutions® developed and introduced the Enterra Dynamic Enterprise Resiliency System™ (EDERS™): a groundbreaking new product designed to enable enterprises to convert macroeconomic and geopolitical chaos into powerful competitive advantage. EDERS is built on Enterra’s Autonomous Decision Science Platform®, which enables organizations to autonomously analyze data, predict outcomes, and execute optimized decisions with high accuracy across complex business operations. It anticipates market shifts and recommends optimal actions and makes decisions with up to 90% accuracy, even in the most volatile economic and political environments.

Concluding Thoughts

Journalist Richard Partington observes, “The US economy remains surprisingly resilient.”[7] Like many people, however, he asks, “But for how long?” That’s a good question. I don’t expect the Trump administration to change its economic policies. And even follow-on administrations may have a difficult time reversing some of the policies being established. As journalist Andrew Duehren observes, “President Trump’s extensive tariffs have already started to generate a significant amount of money for the federal government, a new source of revenue for a heavily indebted nation that American policymakers may start to rely on.”[8] To underscore this point, remember that President Biden kept in place many of the tariffs initiated during the first Trump administration. What that means is that businesses don’t have the option of waiting to act hoping that conditions will return to some sort of normalcy. Alan Demers, founder of InsurTech Consulting, and Stephen Applebaum, managing partner, Insurance Solutions Group, explain, “Until recently, it was said that the only constant was change — now the only constant is uncertainty. Uncertainty is at a generational high in almost every aspect of our lives: socially, financially, politically, and technologically.”[9] Only AI-powered solutions have the capacity to help companies deal with the uncertainty by minimizing risks and taking advantage of emerging opportunities.

Footnotes

[1] Rachel Wolfe and Justin Lahart, “U.S. Hiring Slowed Sharply Over the Summer,” The Wall Street Journal, 1 August 2025.

[2] Thomas Loftus, “The Morning Download: Competitive Edge in the Age of AI,” The Wall Street Journal/CIO Journal, 4 August 2025.

[3] Staff, “How does consumer spending impact economic growth?” U.S. Bank, 18 July 2025.

[4] Eve Upton-Clark, “Not spending is trending,” Fast Company, 31 July 2025.

[5] Katherine Hamilton and Natasha Khan, “American Consumers Are Getting Thrifty Again,” The Wall Street Journal, 3 August 2025.

[6] Gerrit De Vynck, “Big Tech’s hefty AI spending is reshaping the slowing economy,” The Washington Post, 4 August 2025.

[7] Richard Partington, “Despite Trump, the US economy remains surprisingly resilient. But for how long?” The Guardian, 3 August 2025.

[8] Andrew Duehren, “Trump’s Tariffs Are Making Money. That May Make Them Hard to Quit.” The New York Times, 3 August 2025.

[9] Alan Demers and Stephen Applebaum, “Uncertainty is the New Normal,” Insurance Thought Leadership, 18 March 2025.