The tariffs announced last week on prescription drugs, heavy trucks and furniture have led to an overall average effective tariff rate of 17.9%, the highest since 1934, Seeking Alpha reported Saturday (Sept. 27), citing data from The Budget Lab at Yale.
The lab found that the overall price level from all 2025 tariffs is now up 1.7% in the short run, or the equivalent of an average per household income loss of $2,400.
As for the tariffs’ impact on real gross domestic product, U.S. GDP growth is now forecast to be 0.5 percentage points lower over this year and 0.4 percentage points lower over next year, the report said.
The Yale lab also projects that the unemployment rate will creep up 0.3 percentage points by the end of this year and 0.7 percentage points by the end of 2026 due to the tariffs, with payrolls expected to be 490,000 lower by the end of 2025.
“In the long-run, tariffs present a trade-off,” said Ernie Tedeschi, director of economics at The Budget Lab. “Total U.S. manufacturing output expands by 2.7%, but advanced manufacturing shrinks by 4.2%. Moreover, the manufacturing gains are more than crowded out by other sectors: e.g. construction output contracts by 3.7%.”
The findings come at a time when U.S. consumers continue to feel pressured by tariffs and other factors, with the share of Americans who live paycheck to paycheck remaining “stubbornly high,” as PYMNTS wrote last week.
Research from the PYMNT Intelligence report “Why Paycheck-to-Paycheck Consumers Can’t Weather a $2,000 Shock” found that — in August — 68% of U.S. consumers reported that they were in this position, a figure that leaves little room for error when a surprise bill shows up.
“For many, the pressure has mounted to the point where even modest unplanned costs, like a car repair or a dental visit, can destabilize their finances. The average household’s liquid savings have declined by more than 10% in the past 16 months, leaving thinner cushions to absorb shocks,” PYMNTS wrote. “These fragile finances are feeding directly into decisions about discretionary spending.”
Meanwhile, recent data from the Bureau of Economic Analysis shows that consumers’ savings cushions are shrinking. The personal saving rate dropped from 4.8% in July to 4.6% in August, below the respective first-quarter and second-quarter averages of 5.1% and 5.3%.