The American economy, a puzzle whose pieces don’t fit together.
BBC World Service wrote in an article by Natalie Sherman that US President Donald Trump’s tariff policies have put the world’s largest economy at risk of stagflation.
The article states: Economists say Trump’s tariffs and tough immigration policies risk a return to “stagflation” similar to the 1970s, when an unexpected oil shock fueled stagnant growth and a price-wage spiral, except this time the crisis will be self-inflationary!
However, the White House has recently strongly denied these concerns, attacking experts and, in the case of the Commissioner of the Bureau of Labor Statistics, firing him, which has become the subject of news circles.
Uncertainty and questions about where all this will lead have paralyzed the US central bank, which is waiting for information and data to clarify the current situation before taking any action on interest rates.
However, after a busy few weeks of corporate updates, jobs and inflation data, the situation remains unclear! The labor market is sending clearly worrying messages.
Job creation was almost zero in May and June, and in July it was lackluster, and the ranks of discouraged workers are growing. The August 1 jobs report weakened stock markets and upset Trump, prompting him to fire the commissioner of the Bureau of Labor Statistics.
A few days later, Mark Zandi, a prominent Iranian-American economist at Moody’s Analytics, announced on social media that the US economy was “on the verge of a recession.”
Of course, there is no consensus on this. The economy has certainly slowed down, and in the first half of this year, it grew at a rate of 1.2 percent, which is one percentage point lower than last year.