Weekly Economic Update: July 9, 2025

“Big Beautiful Bill” signed into law

Now that President Donald Trump has signed the sweeping reconciliation bill into law, the markets can take that potential unknown off the table and adapt to a new landscape.¹ This does not mean the bill is perfect, that everyone loves every aspect of the bill or that the world will be perfect going forward. Far from it. But no matter how you feel about the bill and whether it went too far or not far enough, markets just wanted it done.

Now we don’t have to deal with the possibility of tax rates reverting to pre-2017 levels or another debt ceiling crisis.² Taxes going back to what they were was always a political suicide pill as well as a bad outcome for the people, the economy and markets — which made the passage of the bill a slam dunk. It was just a question of what other policy “barnacles” could be attached or removed. The process was a mess to watch and reaffirmed why Congress gets such dismal approval ratings from most Americans.

The far-reaching impact of the bill is still to be determined. Will it bring the promised growth and usher in a “New Golden Age,” raise government revenues and pay for our debt through growth as the president has proclaimed?³ Maybe. We certainly hope so, and we will never cheer against the USA. The markets, however, don’t really care. They will adapt, evolve and strive to move forward.

After the smoke cleared, the bill moved through the House 218-214, as all Democrats and two Republicans voted against its passage.⁴ In the Senate, the bill passed 51-50, with Vice President JD Vance casting the tie-breaking vote after all Senate Democrats and three Republicans voted nay.⁵ President Trump signed it into law on July 4 at 5 p.m. Eastern.

Jobs, tariffs, pressure to lower rates and everything else

Markets closed higher to end the short week, with the S&P 500 and Nasdaq setting new records and the Dow closing in on a new high.^6,7,8 The rebound from the April lows has been remarkable. There seems to be a lot of enthusiasm and optimism in the markets, just like we saw at the beginning of the year.

The current mood is pretty good. With the One Big Beautiful Bill debate and drama behind us, a big unknown has been settled, and the markets can focus once again on economic data, tariffs and interest rates. So, what are we seeing in those areas?

First, jobs. Last week, we saw the Job Openings and Labor Turnover Summary (JOLTS) for May, which increased and exceeded consensus by over 400,000. (Consensus was 7.3 million; actual was 7.8 million.)⁹ This signals economic strength; more openings mean there are fewer people competing for jobs.

Then we had the ADP employment number, which was coming off a weak May report. Hopes were that May’s number was a fluke and it would rebound in June, but that didn’t happen. This month’s data showed outright job losses in June of 33,000, wildly missing expectations of a rebound to +100,000.¹⁰

Finally, the June Bureau of Labor Statistics (BLS) employment situation number was released on Thursday, showing +147,000 jobs in June vs. a consensus of +110,000. Meanwhile, the unemployment rate dipped from 4.2% to 4.1%.¹¹

Whatever your thoughts about the efficacy of the ADP report, something is going on in corporate America that wasn’t apparent on the non-farm payrolls top-line number, but corporate America’s job growth is not robust. The two biggest areas of growth were state government and health care; while these aren’t federal government jobs, obviously the state jobs are government and the health care jobs are heavily dependent on government spending.

That leads us to a discussion on rates. Maybe the economy isn’t as strong as Federal Reserve Chair Jerome Powell believes, and the Fed doesn’t have “the luxury of waiting,” as he said several months ago.¹² Maybe the time to act is now because maybe things are about to get worse. What would cutting rates by 25 or 50 basis points really hurt? Inflation seems tame, and Powell’s fears that tariffs would reignite inflation haven’t materialized. Markets will begin to get touchy soon unless Powell signals cuts are coming.

Speaking of tariffs, a week ago, Trump threatened to cut off all trade talks because Canada was going to impose a digital service tax on U.S. tech companies doing business there. But our northern neighbor quickly rolled back the measure “in anticipation” of a trade deal. Then, on Wednesday, a deal with Vietnam was announced.¹³ We still have nothing but talk with China, the European Union, Japan, Mexico and others.

This cycle will likely continue, with the phrase “in anticipation” making a regular appearance. These trade talks aren’t unilateral (as much as the Trump administration would like them to be); the other side will always have a say, and it won’t always be what we want and how soon we want to hear it.

Finally, things are quiet after the strike on Iran’s nuclear sites. There appears to be some talk of a ceasefire in Gaza between Israel and Hamas, which is a positive development.¹⁴ However, the conflict lingers on in Ukraine, and a resolution remains elusive.

Coming this week

• Wednesday will be the only meaningful day from a data perspective, as we see the minutes from the last Fed meeting. These will be gone through with a fine-tooth comb. We were actually two votes short of guiding only one rate cut this year, when the markets are expecting two or three by year-end.
• We’ll also see MBA mortgage applications on Wednesday. Then Thursday and Friday will be pretty muted, with weekly unemployment claims being the only potentially significant data.
• Two key things to watch this week:
  • The 90-day suspensions on tariffs are set to expire. This could create problems depending on how it unfolds.
  • Lots of the A-team players on Wall Street are on vacation. Volumes could be light, and less experienced folks could drive up volatility.

Sources:

¹ Kevin Liptak, Betsy Klein and Kit Maher. CNN. July 4, 2025. “Trump signs his agenda bill, with a flyover and fireworks to mark the occasion.” https://www.cnn.com/2025/07/04/politics/donald-trump-policy-bill-celebration. Accessed July 7, 2025.

² Kevin Freking and Lisa Mascaro. AP. July 4, 2025. “What’s in the tax and spending bill that Trump has signed into law.” https://apnews.com/article/what-is-republican-trump-tax-bill-f65be44e1050431a601320197322551b. Accessed July 7, 2025.

³ The White House. July 3, 2025. “HISTORY MADE: The One Big Beautiful Bill Is on Its Way to President Trump’s Desk.” https://www.whitehouse.gov/articles/2025/07/history-made-the-one-big-beautiful-bill-is-on-its-way-to-president-trumps-desk/. Accessed July 7, 2025.

⁴ Kaia Hubbard, Ellis Kim and Caitlin Yilek. CBS News. July 3, 2025. “House passes ‘big, beautiful bill,’ sending it to Trump’s desk in 218-214 vote.” https://www.cbsnews.com/news/house-vote-big-beautiful-bill-rules-committee/. Accessed July 7, 2025.

⁵ Kaia Hubbard. CBS News. July 1, 2025. “Senate passes Trump’s ‘big, beautiful bill’ in 51 to 50 vote after marathon session.” https://www.cbsnews.com/news/senate-debate-trump-one-big-beautiful-bill/. Accessed July 7, 2025.

⁶ Yahoo! Finance. “S&P 500 (ˆGSPC).” https://finance.yahoo.com/quote/%5EGSPC/. Accessed July 7, 2025.

⁷ Yahoo! Finance. “NASDAQ Composite (ˆIXIC).” https://finance.yahoo.com/quote/%5EIXIC/. Accessed July 7, 2025.

⁸ Yahoo! Finance. “Dow Jones Industrial Average (ˆDJI).” https://finance.yahoo.com/quote/%5EDJI/. Accessed July 7, 2025.

⁹ U.S. Bureau of Labor Statistics. July 1, 2025. “Job Openings and Labor Turnover Summary.” https://www.bls.gov/news.release/jolts.nr0.htm. Accessed July 7, 2025.

¹⁰ ADP Research. June 2025. “ADP® National Employment Report.” https://adpemploymentreport.com/. Accessed July 7, 2025.

¹¹ U.S. Bureau of Labor Statistics. July 3, 2025. “Employment Situation Summary.” https://www.bls.gov/news.release/empsit.nr0.htm. Accessed July 7, 2025.

¹² Nicholas Jasinski. Barron’s. Feb. 12, 2025. “Fed Needs to See Resumed Inflation Progress Before Cutting: Powell.” https://www.barrons.com/livecoverage/jerome-powell-speech-fed-testimony-senate-house. Accessed July 7, 2025.

¹³ Miranda Jeyaretnam. TIME. July 7, 2025. “As Tariff Deadline Looms, What to Know About Trump’s Trade Deals.” https://time.com/7300389/trump-trade-deals-tariff-letters-deadline/. Accessed July 7, 2025.

¹⁴ Wafaa Shurafa, et al. The Associated Press. July 6, 2025. “New details emerge on Gaza ceasefire proposal as Netanyahu heads to the White House.” https://apnews.com/article/gaza-hamas-israel-ceasefire-f98461150ec7572beb8432325cbfd299. Accessed July 7, 2025.

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