Fears of stagflation have emerged as President Donald Trump’s tariff policies coincide with signs of an economic slowdown. The dual threat of rising prices and sluggish growth has unsettled consumers, businesses, and investors, leading to a sell-off in stocks and a surge in bond purchases. Mark Zandi of Moody’s Analytics noted that the situation aligns with stagflation, driven by tariff and immigration policies. Recent data shows consumer sentiment at multi-year lows, while inflation expectations hit a near 30-year high. Factory activity barely grew in February, with new orders dropping significantly, according to the Institute for Supply Management. The Atlanta Fed’s GDPNow tracker predicts a 2.8% annualized decline in Q1 growth, signaling potential economic contraction. Treasury yields have fallen sharply, with the 10-year note yield dropping to 4.2%, reflecting investor concerns. White House officials, however, remain optimistic, asserting that short-term challenges will pave the way for long-term economic strength through a revitalized manufacturing sector. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent emphasized the administration’s focus on rebalancing the economy toward Main Street. Upcoming jobs data will be crucial in determining whether the economy is heading toward stagflation or stabilizing. — news from CNBC
