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Experts Warn of 'Stagflation Lite' Gripping the US Economy
29 Aug
Summary
- US economy may face slow growth and accelerating inflation
- Tariffs by President Trump are driving up consumer prices and slowing job market
- Economists expect this bout of stagflation to be less severe than the 1970s
According to the latest reports, the US economy may be on the verge of experiencing a bout of 'stagflation lite' - a period of slow economic growth coupled with accelerating inflation. This economic phenomenon, which is different from a typical recession, is being driven in part by the tariffs imposed by President Trump.
The tariffs are pushing up consumer prices while simultaneously slowing down the job market. Economists expect this current episode of stagflation to be much less severe than the double-digit annual price increases that plagued the US in the 1970s. However, they still warn that the country is entering a period of below-trend growth and uncomfortable price pressures.
For example, forecasts suggest that inflation, as measured by core PCE prices, could peak at a 3.5% annual increase in the coming year - well above the Federal Reserve's 2% target, but nowhere near the levels seen during the 1970s stagflation. Similarly, economic growth is expected to slow to an annual rate of just 1%, less than half the average since 2010, but avoiding an outright recession.
