Recent discussions among economists have centered on potential risks to the US economy under President Donald Trump’s administration. Concerns have been raised regarding tariffs and immigration policies, with some experts suggesting they might lead to a situation akin to “stagflation,” similar to the economic difficulties of the 1970s. The White House has been dismissive of these concerns, challenging the credibility of economists and even dismissing the US Bureau of Labor Statistics commissioner.
The US central bank remains cautious, awaiting clearer data to inform its decisions on interest rates. Recent reports related to job creation and inflation have generated uncertainty. Job growth has slowed, with minimal increases reported in May and June and a lack of significant improvement in July, raising concerns about growing numbers of discouraged workers.
Despite these challenges, the prevailing economic outlook is mixed. As of August 1, the stock market reacted negatively to the jobs report, prompting further scrutiny of the administration’s economic strategies. In contrast, some analysts, like economist Mark Zandi from Moody’s Analytics, warned of a potential recession.
While the economy’s growth rate slowed to 1.2% in the first half of the year, consumer spending has proven to be more resilient than anticipated. Reports indicate a slight increase in retail and restaurant spending in July, alongside unexpected stronger figures from June. This has led some to suggest a forthcoming modest recovery in consumer confidence, supported by ongoing tax cuts and a rebound in the stock market.
However, challenges remain, particularly concerning rising prices. Consumer prices increased by 2.7% in July year-on-year, with expectations of price hikes widening due to adjustments following tariff policies. Notably, the producer price index showed a significant rise, indicating that inflation could affect a wider array of goods, raising concerns about the potential for stagflation.
Source: https://www.bbc.com/news/articles/cwypgx90243o?at_medium=RSS&at_campaign=rss