Illustration: Lazaro Gamio/Axios

It's President Trump's move now that he got the rate cut he's been asking for since March, but Fed chair Jerome Powell stopped just short of giving him and the market everything they wanted at the Fed's policy meeting Wednesday.

Why it matters: Powell's cut is the central bank's latest effort to address the U.S. economy's current bipolar state: While consumers are confident and continue to spend, the significant pullback in the manufacturing and transportation sectors shows that businesses are not.

On one side: Tuesday's rock-solid U.S. consumer confidence reading was the latest sign that Americans feel good.

  • Commerce Department data Friday showed consumer spending, which makes up the lion's share of the U.S. economy, increased 4.3% in the second quarter, while government spending rose 5%, the biggest boost in a decade.

On the other side: Those numbers fly in the face of data on business investment that show firms dramatically slowing down spending and delaying big projects because of the uncertainty caused by the trade war.

  • Nonresidential investment fell 0.6% in Q2, the first drop since 2015, and residential investment decreased for a sixth straight period.
  • Readings on the U.S. manufacturing sector have fallen for 6 straight months — nearing an outright contraction — and the freight industry also has been slowing for the better part of the year.

The big picture: "Something has got to change," Mark Zandi, chief economist at Moody's Analytics, tells Axios. "Either consumers hold tough and cheer up businesses and they resume investing again, or businesses lose faith and cause consumers to pack it in, and we go into recession."

  • Which way the economy goes depends on Trump, Zandi says. While he continued to heckle the Fed on Twitter Wednesday after the rate-cut decision, it's Trump's tariffs and trade war with China that will determine whether the economy gets back on track or not.

Where it stands: As Powell mentioned during his press conference, the current cease-fire in the trade war has settled business owners somewhat, but further aggression will likely see more companies in the trade sector and other parts of the economy start to show negative effects.

  • "Confidence is all about the labor market right now and, somewhat paradoxically, because companies are not investing in capital goods, that might be creating more demand for labor," Tendayi Kapfidze, chief economist at LendingTree, told Axios. "Is it sustainable? I think the longer we go without a resolution to this trade issue, things start to get more vulnerable."

Go deeper

Biden releases 2019 tax returns ahead of debate

Photo: Alex Wong/Getty Images

Joe Biden's campaign released his 2019 tax returns on Tuesday, showing that he and his wife, Jill, paid nearly $300,000 in federal taxes last year.

Why it matters: The release, timed just hours before the first presidential debate, comes days after a bombshell New York Times report said that President Trump paid only $750 in federal taxes in 2016 and 2017. Biden's team is hoping to make the tax contrast a sticking point during their showdown.

Updated 52 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1 p.m. ET: 33,443,701 — Total deaths: 1,003,337 — Total recoveries: 23,200,183Map.
  2. U.S.: Total confirmed cases as of 1 p.m. ET: 7,159,222 — Total deaths: 205,345 — Total recoveries: 2,794,608 — Total tests: 102,342,416Map.
  3. Health: Americans won't take Trump's word on the vaccine, Axios-Ipsos poll finds.
  4. States: NYC's coronavirus positivity rate spikes to highest since June.
  5. Sports: Tennessee Titans close facility amid NFL's first coronavirus outbreak.
  6. World: U.K. beats previous record for new coronavirus cases.

NYC's coronavirus positivity rate spikes to highest since June

New York Mayor Bill de Blasio. Photo: Noam Galai/Getty Images

New York City's coronavirus positivity rate has ticked up to 3.25%, its highest since June, Mayor Bill de Blasio said at a news conference on Tuesday.

Why it matters: The jump — from 1.93% on Monday — came on the first day that public elementary classrooms reopened in the city after months of closures, but guidelines state that all public schools will have to shut if the citywide seven-day positivity rate stays above 3%.

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