Prices, immigration repression and a shaken labor market. Does the style stagflation of the 1970s make a return – this time by design? »» This is the question of conference rooms that are clicked and the Fed.
Economists warn that President Trump aggressive price And strict immigration policies disrupt the American economy. Prices increase consumer prices, in particular for essential imports such as coffee and bananas, while limitation of the offer of workforce stifles growth – the creation of fertile soil for stagflationThis dangerous combo of slow growth and high inflation often associated with the 1970s – all potentially self -inflicted by politics. This warning echoes comments in sources such as The guardian and the Financial time“Covering increased inflation and slow growth.
Labor market: weaken but not collapse
May and June have practically seen no job creation; July has checked slightly, but discouraged workers and the downward revisions of jobs are increasing. On August 1, the highly anticipated job report missed expectations, adding that 73,000 non -agricultural male males, well below 100k and more forecasts. Wall Street responded with a strong sale, the dow losing more than 500 points in accordance with the reports of the New York Post.
Moody’s chief economist Mark Zandi warned that the economy was “on the precipice of the recession”, pointing wicks on the wage bill, the increase in inflation and the late sectors such as construction and manufacturing. He notes that if the job levels start to fall regularly, a recession can already be underway depending on Initiate of Business.
Donald Trump imagined on a context of signs in brilliant green dollars, symbolizing his controversial influence on the economic direction of America.
Inflation trends: assembly of consumer and wholesale pressures
Consumer prices increased by 2.7% in annual shift in July, unchanged from June. However, the Price Price Index (PPI) has increased at its fastest rate in more than three years – a disturbing advanced indicator even before companies are starting to increase consumer prices. Business sectors liquidated pre -tail stocks, and as they do, costs are likely to be heard on consumers – inflation pressures.
The Fed dilemma: stuck between a rock and a dead end
The federal reserve is captured in a classic twin mandate conflict: slower growth compared to persistent inflation. Rate reductions could facilitate economic drag but risk reviving inflation. The Fed is, in fact, paralyzed – waiting for clearer signals while the economy drifts according to Vox.
Market and policies
In response to low data and increasing prices, the markets have dropped. The DOW dropped 542 points on August 1, shaken by work data and fears of prolonged inflation. The White House, on the other hand, rejected the concerns of experts and even dismissed the commissioner at the Bureau of Labor Statistics following criticism and severe job data.
Additional information that deserve to be explored
Technological sector resilience
Despite the wider slowdown, technology remains an aberrant value. Mark Zandi highlights immigration and innovation as factors that maintain afloat technology, even in broader hiring stands.
Cost for consumers
Steven Greenhouse argues that Trump policies punish households, which increases the costs of about $ 2,400 per house per year, especially in clothing and shoes.
GDP gel – masked by AI investment
Growth slowed down to 1.2% annualized in the first half of 2025, compared to 2.8% in 2024. The investment of artificial intelligence strengthens the figures of the head, but the underlying force is declining.
President Donald Trump signs a rate order as part of the new American-UE commercial framework, marking a key moment in the reshaping of international trade.
People also ask
What exactly defines “stagflation”?
Stagflation is the simultaneous occurrence of high persistent inflation and stagnant economic growth, often associated with an increase in unemployment. It presents a political enigma: reduction in the risk of inflation deepening stagnation, while stimulating growth can supply inflation.
Why are employment data revised downwards so much?
Important revisions often occur during economic inflection points. Payroll data can be late, in particular in the midst of government jobs and declining structural changes – reducing significant adjustments when more complete data are available.
How do the prices fall to consumer prices?
Prices increase import costs. Initially, companies can absorb this or move existing stocks, but over time, because actions turn around and confidence in the commercial policy, higher costs go through prices increasing from goods such as coffee, electronics and clothing.
Could the economy avoid recession – and how?
Yes. Consumer expenditure remains reasonably robust, supported by AI -oriented investments and recent tax reductions. If the uncertainty of the policies accumulates or the adjustments are made, in particular around prices and immigration – growth may surprise the increase. But in the absence of these changes, the risks remain high.
Final reflections
The American economy is trapped in a labyrinth induced by politics: prices are inflation, immigration restrictions reduce growth, employment data flash warning signs and Fed is stuck between the fight against inflation and unable to stimulate force. The resulting mixture echoes the dystopia of the 1970s of stagflation – only this time, the fault lies in the daring political conception. The question of whether the economy can spread depends as much on political pivots as on data clarity.