U.S. Inflation Rises 2.9% Jobless Claims Hit Four-Year High

Recent economic data reveal rising inflation alongside a weakening U.S. labor market, creating a challenging environment for the Federal Reserve as it prepares to cut interest rates despite persistent price pressures. Consumer prices increased 2.9% year-over-year in August, driven by rising costs in gas, groceries, and airfares, with core inflation steady at 3.1%, both above the Fed’s 2% target. Meanwhile, weekly jobless claims surged to 263,000, the highest in nearly four years, signaling growing layoffs and a faltering labor market, while monthly job additions fell short of expectations. This combination of slowing economic growth, rising unemployment, and elevated inflation raises the risk of stagflation, a rare and difficult economic condition to manage. President Donald Trump is under pressure as these troubling labor figures come amid uncertainty about his economic policies, including tariffs, which may be discouraging hiring. The inflation uptick is partly attributed to tariff-related costs passed on to consumers, while service sector inflation remains elevated, complicating the Fed's policy decisions.