It has become increasingly clear that inflationary and economic issues are continuing to have an outsized effect on nonprofits in Central Ohio. Given that, we wanted to share some economic updates of relevance for nonprofits, as the consequences of the White House’s policies become clearer.

1) The economy slowed in the first half of 2025, as the new administration’s tariff pronouncements have ebbed and flowed.

Here’s some analysis from the NYTimes piece, which underscores that it’s hard to project how the economy will respond overall: There’s some discouraging data, and there’s some encouraging data in our economy’s continued resilience.

“We don’t think we’ve seen the full effects from tariffs yet,” said Michael Gapen, chief U.S. economist for Morgan Stanley. “I don’t see how we power through without a soft patch at least for a little while.”

But the economy has repeatedly defied such gloomy predictions in recent years, and some forecasters believe it could do so again. Unemployment remains low, measures of consumer confidence have rebounded and tariffs have so far done little to push up prices overall. The tax-and-spending bill passed by Congress [last] month could also provide a short-term boost to economic activity, although many budget experts have warned that it could pose a long-term risk by adding trillions to the federal debt.

“We’re going to look back and either say, ‘Wow, the economy was super resilient and these things didn’t matter as much as we thought they would,’ or we’re going to say, ‘Yeah, you could kind of feel it was weakening,’” said Louise Sheiner, an economist at the Brookings Institution. “I think we just don’t know.”

As ever, there’s nuance to this. Here’s an example of that nuance from economists Heather Long and Jason Furman:

Importantly, we’re approaching another inflection point with the tariffs, which have been difficult for everyone to anticipate, as Michigan economist Justin Wolfers cheekily notes:

The Federal Reserve’s measure of inflation increased last month, signaling that Trump’s tariffs are starting to impact consumer prices. Consumer prices rose 0.3% in June and were up 2.6% from last year, according to the Personal Consumption Expenditures price index released by the Commerce Department.

This increase is widening divisions among Fed officials and between the bank and the President. Policymakers are weighing the risks of lowering interest rates to encourage spending and investment or holding them steady to keep inflation under control. Last week, the Fed decided to hold interest rates steady for the fifth time in a row due to the ever-changing nature of President Trump’s tariffs and economic priorities.

Additionally, a new wave of enormous tariffs was rolled out last week. You can see them here. We’ll continue to monitor their effects.

We want to underscore that a recession does not appear as likely as it once did, as the White House has retreated from some of the cartoonish tariff rates it was throwing around early on. But that perspective is not universal: On Monday, the influential chief economist of Moody’s Analytics said we’re on the cusp of a recession.

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2) The job market is cooling, with hiring concentrated in healthcare, social assistance, and secondary education.

As we’re running around telling anyone who will listen about the financial and service burdens that are billowing for nonprofits, hiring in the overall economy is concentrated in our sectors. 78% of new jobs added since January are in those three sectors listed above.

While this isn’t a sign of a healthy job market overall, it’s a really interesting paradox that may be emerging here, while there’s still money left over for these sectors to try and meet the still-growing demand for services.

Here’s how Heather Long interprets the data:

“The social assistance ‘boom’ is a similar story to the healthcare boom. We need more of it and it was tough to hire for in the pandemic, so we’re still trying to make up for that on top of growing needs for elderly, depressed youth, etc.”

Furthermore, the Bureau of Labor Statistics’ July jobs report came out last Friday, along with revisions from the prior two months’ reports. Job growth totaled 73,000 for July, below the Dow Jones estimate for a gain of 100,000. June and May totals were revised much lower, down by a combined 258,000 from previously announced levels.

That’s the worst three months of job growth since the early days of the pandemic. The figures were so bad that the White House ordered the dismissal of Erika McEntarfer, the commissioner of the Bureau of Labor Statistics, after falsely claiming the report included “faked” jobs numbers on social media. This will bring into question the accuracy of future jobs reports from the BLS.

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3) Nonprofit Job Losses Near 23,000 Nationally Since 1/20/25: In the nonprofit sector overall, The Chronicle of Philanthropy finds that nearly 23,000 jobs have been lost in the sector since inauguration day.

4) There’s a new report on philanthropic giving out from AFP that’s, of course, intertwined with all this economic news.

Here’s the opening salvo from the summary:

Q1 2025 fundraising data from the Fundraising Effectiveness Project (FEP), released today, shows an increase of 3.6% in total dollars raised compared to 2024 levels, driven largely by larger gifts. However, this growth masks significant declines in grassroots contributions and highlights the ongoing importance of diversifying donor strategies to ensure long-term sustainability. Despite the rise in total dollars, the number of donors declined by 1.3% year-over-year, and retention rates slipped slightly from 18.3% in 2024 to 18.1% in Q1 2025. The smallest donor group ($1–$100), who made up 57.0% of all donors in Q1 2025, experienced an 11.1% year-over-year drop, continuing a trend of decreased engagement from small donors early in the year.

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Here are the two key takeaways given all of the above:

1. In times of economic uncertainty, the demand for nonprofit services rises as philanthropic giving becomes more inaccessible. The timing is particularly challenging for the sector, given the federal funding shifts that are causing an existential crisis for the sector.
2. With federal jobs data harder to trust for the foreseeable future, nonprofits’ anecdotal experiences and their data will become more valuable in helping decision makers understand the true state of the economy.

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