- Fears of stagnation rising While President Trump is preparing to implement a new tariff, exacerbating trade tensions and perhaps slowing economic growth while inflation rises. Analysts and economists, including those from Deutsche Bank and Goldman Sachs, warn against weakening economic indicators, high inflation expectations, and increasing the risk of stagnation, which leads to speculation that the federal reserve may sit tightly to the price discounts so that it has more data.
With the passage of the hour to President Trump “Liberation Day”Fears of stagnation – enlarged growth with high prices – they are only escalating.
The White House did little to reduce a caught of a commercial war escalating between Uncle Sam and some of its closest economic allies. In fact, President Trump has A hint of “all countries” will face an increase in duties Entering into force immediately.
Although there will be a time to negotiate – anything confirmed by White House press secretary Caroline Levit – he will only do little to alleviate the initial shock waves rippled across global markets.
the Glorious expectations Analysts pushed to take a more downward position on the US economy in the shortest.
Data that indicates high inflation fears Along with the distinctive features of the slow economy– And before President Trump Rose Garden announced later today – he is already leading many economists to expect stagnation.
In the morning note that you saw luckand German bankJim Reed has written the last payments of American data less than expectations, “aggravated” concern about the recession.
For example, the ISM Manufacturing Institute measures manufacturing activity across 400 industrial companies to produce the Puritan Procurement Manager Institute (PMI).
Read the index above 50 expansion, and read below indicates contraction. The latest PMI report Yesterday’s edition showed a reading of 49.0 – less than 49.5 expected.
The most prominent decrease in the index was from imports. Although reading for the month of March is still 50.1 %-the decrease in the “growth” lands-is still witnessing a decrease of 2.5 % compared to the previous month, indicating slowing activity.
“The ISM version has witnessed the weakest version that my gross domestic product in Atlanta GDP has decreased: to the lowest new level by -1.4 %, while the model estimated the real local final sales, which distorted a significantly from trade fluctuations, decreased to positive but weak +0.4 %.”
“The data continues to support the narrative of the weaker growth and the high inflation, with the high market inflation expectations continues to rise.”
Similarly, inflation expectations are expected, led by consumers, but they lead some experts to fear if the markets will follow their example.
For example, the Federal Reserve in New York The latest report The inflation expectations for consumers for the next year sat 3.1 % – by 0.1 % in the previous month – and 3 % during the three years to the next five.
While he was the president of his regional federal bank The market warned against increasing their inflation expectations Very severely, the likes of Goldman Sachs have modified their expectations towards a more stagnant environment.
Goldman David David Merikli wrote on Monday that the financial giant has raised the basic inflation expectations by 0.5P to 3.5 % by the end of 2025, and reduced its growth expectations by 0.5PP to 1 %.
He added: “We have raised our unemployment rates by 0.3P to 4.5 % at the end of 2025 to reflect the growth of the weakest gross domestic product, the effects of federal spending and the demobilization of workers.
“We have raised the possibility of a 12 -month stagnation from 20 % to 35 %, which reflects our low growth expectations, hanging confidence, and data from White House officials that indicate preparation for tolerance with economic pain.”
Running the Federal Reserve Path
Meanwhile, Claudia Siham, who created The recession index calledShe said that she determines a “whiff” of interest in stagnation in the data of the Federal Reserve.
In reference to the federal reserve plans-which show that flat growth and inflation planning are higher than their declining direction over the past few years-Sahm wrote: “The description of” a whiff “reflects the relatively modest strikes to growth and enhancement of inflation this year, as well as a low rapid return to inflation next year.
She added that the potential recession indicators are not the same that work under these economic conditions President of the Federal Reserve in Chicago Austan Golsby An indication that inflation still sits about 2 % and the unemployment is still stable.
She concluded: “The smell of inflation – high inflation and low growth – noticeable in the Federal Reserve Telecom, especially when discussing the risks facing expectations.
“The inflation caused by customs tariffs has a better chance of being” transitional “because the destruction of the demand from the low real income should be sharp in some inflation. This is a little rest. Rose, even if it is modest, will be expensive.
“High uncertainty, unbalanced risks, and stagnant pulses are more than enough to maintain a federal reserve.”
This story was originally shown on Fortune.com
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