This could be the summer of economic hell

In the face of higher tariffs on virtually everything the United States imports, plus a Middle East crisis, the United States economy has, remarkably, held its ground. Inflation has mostly held steady, while the unemployment rate remains near historic lows. Stocks, meanwhile, hit fresh record highs last week.

In the face of higher tariffs on virtually everything the United States imports, plus a Middle East crisis, the United States economy has, remarkably, held its ground. Inflation has mostly held steady, while the unemployment rate remains near historic lows. Stocks, meanwhile, hit fresh record highs last week. That could soon change as crucial deadlines near. The first is July 9, which marks the end of President Donald Trump’s 90-day pause on what he termed as “reciprocal” tariffs on dozens of America’s trading partners. Unless those countries reach trade deals with the US, they could potentially face much higher tariffs. Then, just around the corner from that is the so-called X-date, when the government could default on its debt obligations. That will occur at some point in August, Treasury Secretary Scott Bessent said in a recent letter to congressional leaders. The consequences of the US defaulting on debt, which has never happened, are grave and would likely cause global economic upheaval. That’s why Bessent argued lawmakers need to raise the debt ceiling before Congress’ one-month recess starts on August 4. The president has essentially pressured Congress to raise it by July 4. But complicating that effort is the fact that raising the nation’s borrowing limit is just one of several measures included in his “One Big, Beautiful Bill,” which is what he really wants to sign into law by then. Another pressing situation that could overturn the current calm is the fragile ceasefire Trump brokered between Iran and Israel. It could quickly become undone and cause oil prices to surge at a time when inflation from his tariffs may already be picking up.