The US economy is facing uncertainty as experts warn of a potential “stagflation” crisis, similar to the 1970s. President Donald Trump’s tariffs and immigration policies have raised concerns about stagnant growth and rising prices.
Despite slow job creation and a growing ranks of discouraged workers, consumer spending has remained resilient, with shares quickly recovering from recent declines. Some analysts, like Michael Pearce at Oxford Economics, predict a modest recovery in spending as tax cuts and a stock market rebound boost confidence.
However, challenges remain. Household prices have risen 2.7% compared to last year, and forecasters expect further price increases as firms sell down pre-tariff stock and raise prices. The producer price index accelerated at its fastest pace in over three years in July, suggesting stagflation might be returning.
The US central bank is waiting for data to clarify what’s happening before making a move on interest rates. With the labour market sending worrisome signals, experts are divided on whether the economy will power through or succumb to recession.
Source: https://www.bbc.com/news/articles/cwypgx90243o