Stagflationary Outlook for the U.S. Economy

SOURCE www.cnbc.com
Policy uncertainty and new sweeping tariffs from the Trump administration are combining to create a stagflationary outlook for the U.S. economy in the latest CNBC Rapid Update.

Key Points

  • First quarter growth estimated at 0.3%
  • Core PCE inflation expected to remain around 2.9%
  • Slowdown in consumer and business sentiment impacting economic activity

Pros

  • Gradual rebound in GDP forecasted by economists
  • Import effect expected to abate
  • No consecutive quarters of economic contraction predicted

Cons

  • Anemic growth of 0.3% could lead to a recession
  • Stubborn inflation complicates Fed's response to flagging growth
  • Difficulty in justifying rate cuts until inflation falls convincingly