President Trump’s tariffs and massive GOP tax cuts are set to have competing effects on the economy, according to the latest outlook report from the Congressional Budget Office (CBO), which shows an increased stagflationary mix for the rest of 2025.

Tariffs are expected to rein in economic growth, while tax cuts are expected to boost it through increases in capital stock and productivity.

While tax cuts and work requirements in the One Big Beautiful Bill Act will boost labor supply in the long run, the CBO projected Trump’s immigration crackdown will shrink it in the short run and is already contributing to a dramatic drop in hiring across the economy, with an average of just 29,000 jobs being added per month since June.

The outlook for this year is weaker than previously forecast, whil

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