Circus Tents, Factories and 2026 Job Creation

Five months into 2026, job creation appears to have returned to normal after an unusually weak 2025. The weak job growth of 2025 likely reflected several factors: uncertainty around tariffs and trade policy, slowing labor force growth from weaker immigration, and higher interest rates. Some of the 2025 tariffs have since been struck down by the courts. Trade uncertainty remains higher than it was in 2024, but 2026 has had less disruption than 2025.

A president changes the economy primarily through policy. War with Iran has increased inflation. Trump's 2025 tariffs lowered job creation. But in 2026 Trump has had less impact on trade policy than he did in 2025, because the courts have ruled that Congress, not the president, has the authority to impose taxes, even in the form of tariffs. That is good for the economy. To the extent that Americans no longer worry that presidential narrative will become actual policy, late night posts can be dismissed as odd but irrelevant.

Within limits, politics can become increasingly theatrical while much of economic life continues according to its own logic. America is at times a place with a circus tent out front, full of spectacle and sentiment, and a factory and office in the back where the actual economic work gets done. The next few years will depend in no small part on whether Congress, the courts, and the voters in November can keep the show in the tent and out of the factory.