Apollo’s top economist Torsten Sløk is warning that damage from Donald Trump’s tariffs will be felt in the coming months, with inflation expected to peak by November or December. Sløk predicts prices will rise until then, driven by consumer goods and services inflation.
According to consensus inflation expectations, inflation is already starting to “lift-off” in consumer goods, with the latest report showing a 0.7% year-over-year growth in durables and a headline number of 2.7%. Sløk attributes this to the impact of Trump’s mass deportations on wage growth, which raises employment costs for businesses.
Sløk believes the Fed will wait until it surveys the extent of the damage before cutting interest rates. This could be the start of a stagflation shock, where inflation rises while economic growth slows. Sløk estimates GDP growth in 2025 could more than halve from its peak last year, with inflation remaining around 3% and an unemployment rate rising over the next two years.
The situation is dire for economists, who describe stagflation as one of the worst-case scenarios. With tariffs standing at their current level, Sløk predicts a bleak economic outlook for the coming years.
Source: https://www.businessinsider.com/inflation-trump-tariffs-impact-prices-stagflation-us-economy-slok-apollo-2025-7