Cracks Are Appearing in the Tariff-Era Economy. Think Stagflation.

by Martin Baccardax
Barron’s

People watching the U.S. economy received a jolt of reality Wednesday through feedback from the men and women closest to its key growth engine, and from company bosses who manage the country’s 170 million-strong workforce.

The message wasn’t great. The latest data suggest slowing economic growth with the potential for faster inflation. It could be a toxic combination in that the inflation risk could make it harder for the Federal Reserve to lower rates to prop up the economy as it normally would.

Hiring is slowing, consumers are spending less, and costs are rising in the broadly defined services sector, which powers more than two-thirds of growth in gross domestic product.

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