Stagflation is afraid of spinning while Trump’s tariffs come into force and the economy slows down

The intimidation of growth in the economy has followed concerns about the re -rise of inflation, in turn potentially re -setting up the ugly state that they have not seen in 50 years.

Fears over “stagflation” came as president Donald Trump seems determined slap the tariffs on almost all This enters the country at the same time when more indicators indicate a return to the activities.

This double threat to higher prices and slower growth causes anger among consumers, business leaders and policies, not to mention investors who threw shares and in recent times they have been collecting relationships.

“Moderate, it’s a stagflation,” said Mark Zandi, the main economist of Moody’s Analytics. “It is a greater inflation and weaker economic growth result of politics – tariff politics and immigration policy.”

The phenomenon, which has not been seen from the dark days of hyperinflation and growth in growth in the 1970s and early 80s, has recently been primarily manifested in “soft” data such as surveys about the feelings and index administrator of the supply.

At least among consumers, long -term inflation expectations are at the highest level in almost 30 years, while general moods see many years the lowest. Consumer consumer fell in January At most in almost four years, although the revenue has grown sharply, according to a report of the trade department.

On Monday, Survey of the Institute for Supply Production They showed that factory activity barely expanded in February, while new orders have fallen at most in almost five years, and prices have jumped with the highest monthly margin in more than a year.

Following the ISM reports, Federal Atlanta Reserves Bremnow The measurement of valid economic data reduced its projection for economic growth in the first quarter to an annual drop of 2.8%. If this endures, it would be the first negative growth number of the first quarter 2022. And the worst fall from Coid closing in early 2020.

“Inflation expectations are increased. People are nervous and uncertain about growth,” Zandi said. “Moderately, we are moving towards the Stagflation, but we will not get closer to the stagflation we had in the 70s and 80s, because the Fed will not allow it.”

Indeed, the markets are in a greater chance that the Fed will start reducing interest rates in June and that this year it could reduce three -quarters of a point from its key borrowing rates as a way to slow down any slowdown in the economy.

But Zandi believes that the Fed reaction could do the opposite – to increase the rates to extinguish inflation, in the vein of former chairwoman Paul Volcker, who aggressively hiked in the early 1980s and pulled the economy into a recession. “If it looks like a true stagflation with slow growth, it will sacrifice the economy,” he said.

Sales in stock

Convergated factors cause waves on Wall Street, where stocks were in sale mode this month, deleting the profits that were realized after Trump won the November elections.

Although the industrial average Dow Jones fell again on Tuesday and is about 4.5% by the early days of March, sales did not feel particularly rush and CBOE Volatility indexThe schedule of fear market, was only about 23 Tuesday afternoon, not much above the long -term average. The markets were Good of their lowest sessions in the afternoon trading.

“This is certainly not the time to pressure the panic button,” said Mark Hackett, a major market strategist in Nationwide. “At this point, I’m still at the camp that this is a healthy reset of expectations.”

However, they are not just supplies that show signs of fear.

Treasury yields have been in recent days after destruction of September. The 10 -year reference has dropped to about 4.2%, of about half a percentage point from its January and below a quarterly note, a reliable recession indicator that returns to World War II is called the reverse curve of yield. The yields move the opposite of the price, so the yields indicate a larger appetite for investors for securities with fixed income.

Hackett said he was afraid of a “vicious circle” of activities created by indicators of stray feelings that could be turned into a full crisis. Economists and business managers see tariffs that affect food prices, vehicles, electricity and range of other subjects.

Stagflation “is certainly something to pay attention to, more than it was for a while,” he said. “We have to look. This is such a collapse in the feeling and such a change in the way people look at things, and the level of emotions is so elevated at the moment that it will begin to influence behavior.”

The White House sees ‘the greatest America’

For their part, White House officials claim that short -term pain will be abolished with long -term benefits for benefits. Trump has advertised duties as a way of creating a stronger production base in the US, which is primarily an economy based on service.

The Howard Lutnick Store Secretary recognized on Tuesday in an interview with CNBC that “I can be short-term price movements. But in the long run it will be completely different.” The expectations of the market inflation are in line with these feelings. One metric, which measures Spreading between a nominal five -year treasury of inflation yieldsIt’s at the lowest level in almost two years.

“This will be the biggest America. We will have a balanced budget. The interest rates will be reduced, and I mean 100 base points, 150 base points lower,” Lutnick added. “This president will deliver all these things here and start production.”

Likewise, Scott Beesent Minister told Fox News that there would be a “transitional period” and said that the focus of administration on Main Street is more than Wall Street.

“Wall Street has finished perfectly. Wall Street can still work, but we have a focus on a small business and a consumer,” he said. “We will balance the economy, we will bring production jobs home.”

Important traces about where the economy is being run should come from a report on the payment list on Friday. If the number of jobs is good, it could enhance the idea that the hard data remained firm even when the feelings moved.

But if the report shows that the labor market softens while the salaries are held higher, this could add to the chatter of the stagflation.

“We have to be observed. There is a potential for the term stagflation, speaking of it, it can manifest some of them,” said Hackett, a strategist throughout the country. “I’m not in the We-in-in-Pariod-O-Stignation camp, but it’s a disaster scenario.”