Stagflation fears bubble up as Trump tariffs take effect and the economy slows
A growth scare in the economy has accompanied worries over a resurgence in inflation, threatening to potentially rekindle stagflation.The phenomenon, not seen since the dark days of hyperinflation and sagging growth in the 1970s and early ’80s, has primarily manifested itself lately in “soft” data.
The converging factors are causing waves on Wall Street, where stocks have been been in sell-off mode this month, erasing the gains since Trump’s election in November.
That dual threat of higher prices and slower growth is causing angst among consumers, business leaders and policymakers, not to mention investors who have been dumping stocks and scooping up bonds lately.
“Directionally, it is stagflation,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s higher inflation and weaker economic growth that is the result of policy — tariff policy and immigration policy.”
The phenomenon, not seen since the dark days of hyperinflation and sagging growth in the 1970s and early ’80s, has primarily manifested itself lately in “soft” data such as sentiment surveys and supply manager indexes.
