PR in the Philippines

Fort Myers, Florida Aug 31, 2025  – The U.S. national debt has already surpassed $37.2 trillion, expanding by nearly $1 trillion every five months. Even without new policy initiatives, the Treasury is projected to report a debt exceeding $38 trillion by January 2026. With rising interest expenditures and congressional gridlock, there is minimal flexibility for fiscal adjustments.   Unemployment: A Gradual Ascent The official unemployment rate in August stands at 4.3%, an increase from 4.0% a year prior. Forecasts from the Philadelphia Fed and private sector economists suggest that by early 2026, the unemployment rate could hover at or above 4.5%. This trajectory does not yet indicate widespread layoffs but signifies a cooling labor market, slower hiring activity, and an uptick in jobless claims. For households, even slight increases in unemployment erode bargaining power and lead to diminished wage growth.   The Tariff Impact and Refund Liabilities: President Trump’s re-imposed tariffs were intended to boost government revenue and strengthen negotiating power with international trade partners. Indeed, customs duties have surged to $135.7 billion so far in FY2025, nearly doubling the rate of the previous year. However, a federal appeals court has questioned the legality of these measures, raising the possibility of tens of billions of dollars in refunds if the Supreme Court upholds the ruling.

Should the Treasury be compelled to return even $50-$70 billion of these revenues by January 2026, the federal deficit would escalate significantly. This would largely cancel out the perceived ‘gain’ from tariffs and deepen the fiscal gap already widened by weaker income and payroll tax collections in a sluggish economy.   Decline in Tax Revenues in a Slowing Economy: Tax revenues naturally diminish when economic growth decelerates. Higher unemployment reduces payroll tax inflows, and weaker corporate profits result in lower corporate tax contributions. With GDP growth already trailing its historical trend, the combined effect of reduced receipts and potential tariff refunds could strip $100 billion or more from federal revenue compared to existing projections.   Will 2026 Begin with a Recession? Economists typically define a recession as two consecutive quarters of negative GDP growth, accompanied by a significant downturn in employment and income. By January 2026, the U.S. may not strictly meet this academic definition. Growth is likely to be weak but positive, and unemployment is still below 5%. Nevertheless, the fiscal outlook—characterized by escalating debt, falling tax revenues, and potential refund liabilities—points to a fragile economy highly susceptible to shocks.

If households curtail spending due to job market anxieties, and if global uncertainties impede exports, a critical turning point could arrive swiftly. An economy at ‘stall speed’ may not be technically a recession, but it feels like one for working families and businesses striving to plan for the future.   Conclusion: A Warning, Not Just Data. By the time the Treasury issues its January 2026 report, the figures will likely indicate:
– Debt well exceeding $38 trillion
– Unemployment approaching 4.5-4.6%
– Revenue shortfalls from weaker tax collections
– Potential tariff refunds increasing the deficit by $50-70 billion

Regardless of whether the National Bureau of Economic Research classifies it as a recession, the practical experience will be unmistakable: slower growth, increased costs, and a worsening fiscal outlook month by month. America is not yet in a recession, but it is heading into 2026 more vulnerable than it has been in a decade.   Roy J. Meidinger 14893 American Eagle Ct. Fort Myers, FL 33912 Tel No. (954) – 790-9407