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The backbone of the US economy flashes stagflation warnings as uncertainty spikes on tariffs and layoffs — ‘storm clouds are forming’

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  • A recent survey of small businesses raised numerous red flags about the economy, including trends that point toward potential stagflation pressure. That’s as President Donald Trump keeps companies guessing on what he will do next on federal layoffs and tariffs, raising uncertainty about prices, costs, and expansion plans.

Small businesses are the backbone of the American economy as they employ the vast majority of workers, and they are flashing warnings on stagflationary pressure.

On Tuesday, the NFIB Small Business Optimism Index fell by 2.1 points in February to 100.7 while the reading on uncertainty rose 4 points to 104, the second highest level recorded.

Other findings raised red flags: fewer business owners expect the economy to improve, sales expectations were gloomier, and profit trends worsened.

Additional data points could raise alarms about stagflation, a combination of slower growth or contraction plus higher inflation.

The survey found that just 12% of owners think now is a good time to expand, a 5-point decline from January and the largest monthly decrease since April 2020—when the economy was still reeling from the early stages of the COVID-19 pandemic.

And the share of business owners who are raising average selling prices jumped 10 points from January. That’s the largest monthly increase since April 2021, when the post-pandemic inflation surge was taking off, and the third highest in the survey’s history.

“Confidence that the economy will continue to grow is fading, even with a new management team in place,” the NFIB report said, alluding to the Trump administration.

It cited US tariffs and retaliation from affected countries as well as the federal government shedding workers and trimming expenditures.

NFIB added that many small businesses are supported by work from other firms with government contracts.

“All consistent with the general tone of the financial press, the economy is still growing, but at a slower and slower rate, storm clouds are forming,” it warned.

The mounting pessimism among small-business owners is also echoed by consumers—whose spending is the driving force behind GDP and previously kept the economy resilient through Fed rate hikes.

The latest University of Michigan sentiment survey tumbled 11% from the prior month due to inflation fears. Year-ahead inflation expectations jumped up from 4.3% last month to 4.9% this month, the highest since November 2022 and the third straight month of an unusual large increase. Long-run inflation expectations surged from 3.5% to 3.9%, the largest month-over-month increase since 1993.

Torsten Sløk, chief economist at Apollo Global Management, said in a note on Thursday that this is a “wait-and-see economy” characterized by consumers and firms turning more cautious about spending decisions.

“The wait-and-see economy is no longer just for companies directly involved in trade with Canada and Mexico. Uncertainty for small businesses is near all-time high levels. This is a problem because small businesses are the foundation of the economy, accounting for more than 80% of total US employment,” he warned.

This story was originally featured on Fortune.com

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Trump guts staff at Voice of America and other pro-democracy, US-funded media organizations

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President Donald Trump’s administration on Saturday began making deep cuts to Voice of America and other government-run, pro-democracy programming, with a press advocacy group saying all VOA employees have been put on leave.

On Friday night, shortly after Congress passed its latest funding bill, Trump directed his administration to reduce the functions of several agencies to the minimum required by law. That included the U.S. Agency for Global Media, which houses Voice of America, Radio Free Europe and Asia and Radio Marti, which beams Spanish-language news into Cuba.

On Saturday morning, Kari Lake, the failed Arizona gubernatorial and U.S. Senate candidate whom Trump named a senior adviser to the agency, posted on X that employees should check their email. That coincided with notices going out placing Voice of America staff on paid administrative leave.

Later, Reporters Without Borders said the notices extended to everyone who works for VOA. One reporter, who spoke under the condition of anonymity because they were not authorized to speak to the press, said everyone at the company in an online discussion group reported getting the same letter.

“We expected something like this to happen,” the reporter said, “and it just happened to be today.”

Reporters Without Borders said it “condemns this decision as a departure from the U.S.’s historic role as a defender of free information and calls on the U.S. government to restore VOA and urges Congress and the international community to take action against this unprecedented move.”

The Agency for Global Media also sent notices terminating grants to Radio Free Asia and other programming run by the agency. Voice of America transmits United States domestic news into other countries, often translated into local languages. Radio Free Asia, Europe and Marti beam news into countries with authoritarian regimes in those regions like China, North Korea and Russia.

Combined, the networks reach an estimated 427 million people. They date back to the Cold War and are part of a network of government-funded organizations trying to extend U.S. influence and combat authoritarianism that includes USAID, another agency targeted by Trump.

Thomas Kent, former president and CEO of Radio Free Europe/Radio Liberty, said that Trump’s intentions for the agencies are still foggy. Without these news sources, it will be that much harder for the country to get its messages to the world, he said.

“Without the international broadcasting, the image of the United States and the Trump administration will be in the hands of others, including the administration’s opponents, (and) countries and people who consider the United States an enemy,” said Kent, an international consultant on media ethics.

A video posted on X by Lake on Saturday talked about cost-cutting measures, not mentioning the employees and the mission of Voice of America. Her video was made at a building leased by VOA that Lake described as a waste of money. She said she would try to break the agency’s 15-year lease on the building.

“We’re doing everything we can to cancel contracts that can be cancelled, save more, downsize and make sure there’s no misuse of your dollars,” she said.

The letter places employees on administrative leave and says staff would continue to receive pay and benefits “until otherwise notified.” It ordered employees not to use Agency for Global Media facilities and return equipment like phones and computers.

The Trump administration has already made other steps to assert its authority over Voice of America, and this week cancelled contracts that allowed VOA to use material from independent news organizations, such as The Associated Press.

The administration has also banned the AP from press pools that cover the president and moved to take charge of what news organizations are members of the pools, and the FCC is investigating news organizations like CBS.

Trump’s order requiring reductions also includes several other, lesser-known government agencies such as the Woodrow Wilson International Center for Scholars, a nonpartisan think tank, the United States Interagency Council on Homelessness and the Community Development Financial Institutions Fund.

This story was originally featured on Fortune.com

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Tech News

Trump guts staff at Voice of America and other pro-democracy, US-funded media organizations

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on

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President Donald Trump’s administration on Saturday began making deep cuts to Voice of America and other government-run, pro-democracy programming, with a press advocacy group saying all VOA employees have been put on leave.

On Friday night, shortly after Congress passed its latest funding bill, Trump directed his administration to reduce the functions of several agencies to the minimum required by law. That included the U.S. Agency for Global Media, which houses Voice of America, Radio Free Europe and Asia and Radio Marti, which beams Spanish-language news into Cuba.

On Saturday morning, Kari Lake, the failed Arizona gubernatorial and U.S. Senate candidate whom Trump named a senior adviser to the agency, posted on X that employees should check their email. That coincided with notices going out placing Voice of America staff on paid administrative leave.

Later, Reporters Without Borders said the notices extended to everyone who works for VOA. One reporter, who spoke under the condition of anonymity because they were not authorized to speak to the press, said everyone at the company in an online discussion group reported getting the same letter.

“We expected something like this to happen,” the reporter said, “and it just happened to be today.”

Reporters Without Borders said it “condemns this decision as a departure from the U.S.’s historic role as a defender of free information and calls on the U.S. government to restore VOA and urges Congress and the international community to take action against this unprecedented move.”

The Agency for Global Media also sent notices terminating grants to Radio Free Asia and other programming run by the agency. Voice of America transmits United States domestic news into other countries, often translated into local languages. Radio Free Asia, Europe and Marti beam news into countries with authoritarian regimes in those regions like China, North Korea and Russia.

Combined, the networks reach an estimated 427 million people. They date back to the Cold War and are part of a network of government-funded organizations trying to extend U.S. influence and combat authoritarianism that includes USAID, another agency targeted by Trump.

Thomas Kent, former president and CEO of Radio Free Europe/Radio Liberty, said that Trump’s intentions for the agencies are still foggy. Without these news sources, it will be that much harder for the country to get its messages to the world, he said.

“Without the international broadcasting, the image of the United States and the Trump administration will be in the hands of others, including the administration’s opponents, (and) countries and people who consider the United States an enemy,” said Kent, an international consultant on media ethics.

A video posted on X by Lake on Saturday talked about cost-cutting measures, not mentioning the employees and the mission of Voice of America. Her video was made at a building leased by VOA that Lake described as a waste of money. She said she would try to break the agency’s 15-year lease on the building.

“We’re doing everything we can to cancel contracts that can be cancelled, save more, downsize and make sure there’s no misuse of your dollars,” she said.

The letter places employees on administrative leave and says staff would continue to receive pay and benefits “until otherwise notified.” It ordered employees not to use Agency for Global Media facilities and return equipment like phones and computers.

The Trump administration has already made other steps to assert its authority over Voice of America, and this week cancelled contracts that allowed VOA to use material from independent news organizations, such as The Associated Press.

The administration has also banned the AP from press pools that cover the president and moved to take charge of what news organizations are members of the pools, and the FCC is investigating news organizations like CBS.

Trump’s order requiring reductions also includes several other, lesser-known government agencies such as the Woodrow Wilson International Center for Scholars, a nonpartisan think tank, the United States Interagency Council on Homelessness and the Community Development Financial Institutions Fund.

This story was originally featured on Fortune.com

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Trump invokes 18th century law to declare invasion by gangs and speed deportations—potentially giving immigration crackdown a boost

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Claiming the United States was being invaded by a Venezuelan gang, President Donald Trump on Saturday invoked the Alien Enemies Act of 1798, a sweeping wartime authority that allows the president broader leeway on policy and executive action to speed up mass deportations of people — potentially pushing his promised crackdown on immigration into higher gear.

Trump’s declaration targets Tren de Aragua, contending it is a hostile force acting at the behest of Venezuela’s government. The declaration comes the same day that a federal judge in Washington barred the administration from deporting five Venezuelans under the expected order, a hint at the legal battle brewing over Trump’s move. The judge was scheduled to consider expanding the prohibition on deportation just minutes after Trump’s afternoon announcement.

“Over the years, Venezuelan national and local authorities have ceded ever-greater control over their territories to transnational criminal organizations, including TdA,” Trump’s statement reads. “The result is a hybrid criminal state that is perpetrating an invasion of and predatory incursion into the United States, and which poses a substantial danger to the United States.”

The act was last used as part of the internment of Japanese-American civilians during World War II and has only been used two other times in American history, during World War I and the War of 1812. Trump argued in his declaration that it is justified because he contends the Tren de Aragua gang, a common talking point on the campaign trail, has ties to the regime of Venezuelan President Nicolas Maduro.

Trump talked about using the act during his presidential campaign, and immigration groups were braced for it. That led to Saturday’s unusual lawsuit, filed before Trump’s declaration even became public. The suit by the American Civil Liberties Union and Democracy Forward on behalf of five Venezuelans whose cases suddenly moved towards deportation in recent hours.

James E. Boasberg, chief judge of the D.C. Circuit, agreed to implement a temporary restraining order preventing the deportation for 14 days under the act of the five Venezuelans who are already in immigration custody and believed they were being about to be deported. Boasberg said his order was “to preserve the status quo.” Boasberg scheduled a hearing for later in the afternoon to see if his order should be expanded to protect all Venezuelans in the United States.

Hours later, the Trump administration appealed the initial restraining order, contending that halting a presidential act before it has been announced would cripple the executive branch.

If the order were allowed to stand, “district courts would have license to enjoin virtually any urgent national-security action just upon receipt of a complaint,” the Justice Department wrote in its appeal.

It said district courts might then issue temporary restraining orders on actions such as drone strikes, sensitive intelligence operations, or terrorist captures or extraditions. The court “should halt that path in its tracks,” the department argued.

The unusual flurry of litigation highlights the controversial act, which could give Trump vast power to deport people in the country illegally. It could let him bypass some protections of normal criminal and immigration law to swiftly deport those his administration contends are members of the gang.

The White House has already designated Tren de Aragua a terrorist organization and is preparing to move about 300 people it identifies as members of the gang to detention in El Salvador.

This story was originally featured on Fortune.com

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