by Martin Armstrong
Armstrong Economics
Socrates has honed in on 2025 becoming a year of great stagflation in the United States. The Federal Reserve has finally admitted that the data is undeniable—the United States will experience stagflation.
The economy is declining but prices are rising. Most understand inflation, especially in the post-COVID world, but few understand stagflation. Stagflation is when you have high inflation and stagnant economic growth at the same time. Normally, inflation is supposed to go hand in hand with rising demand and growth. But during stagflation, prices go up even though the economy is barely moving.
“Powell said the president’s tariffs announced so far had been ‘significantly larger than anticipated’, adding that ‘the same was likely to be true of the economic effects, which will include higher inflation and slower growth’,” as reported by every major media outlet. Powell “later added that those economic effects may place US rate setters ‘in the challenging scenario in which our dual-mandate goals are in tension’. The Fed’s dual mandate is to maintain the target 2% inflation while encouraging “maximum” employment levels.