Economic uncertainty is increasing, highlighted by the Philly Fed manufacturing index dropping to a multi-year low, even as layoffs have slowed. The Federal Reserve's focus has shifted to the implications of trade policies, particularly those instituted by Trump, creating a precarious environment for businesses regarding hiring and investment decisions. Typically, an economic slowdown would lead to lower prices, but due to tariffs, prices for goods are rising, complicating the Fed's mandate of maintaining both low inflation and high employment. Despite troubling economic indicators, jobless claims remain stable, indicating no significant layoffs. Fed Chair Jerome Powell emphasized this tension in the Fed's dual mandate, suggesting that a meaningful economic downturn would be needed to prompt a supportive monetary response. Therefore, the likelihood of the Fed stepping in to bolster the economy is currently low, leaving investors at the mercy of prevailing trade policies without substantial support from the Fed.

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