The Threat of Stagflation in the USA

The United States faces a potential stagflation crisis, exacerbated by President Trump's tariff policies. These measures have created a cycle of stagnation and rising inflation, putting the economy at risk.

The Federal Reserve is caught in a difficult position, as raising interest rates could further burden economic growth. The ongoing trade war is a significant negative supply shock that may also affect global partners, particularly Germany, which is calling for increased free trade to mitigate impacts on its automotive industry.

Recent economic data shows growth, yet experts predict downturns as uncertainty looms. Rising prices may strain consumers while low-interest rates challenge investors.

Central banks must stabilize inflation expectations and encourage investment to prevent a deepening stagnation. As the pressure mounts, the delicate balance between economic stimulus and inflation control remains a pressing concern for policymakers.