Traders worked on the floor of the New York Stock Exchange (NYSE) in the Financial District of New York City on March 4, 2025.
Timothy A. Clary | AFP | Getty Images
The economic growth panic, accompanied by concerns about a resurgence of inflation, may in turn rekindle ugly conditions that the United States has never seen in 50 years.
Fear of “stagnation” as president Donald Trump Seems determined Almost nothing This is entered the country while multiple indicators point to the callback in activity.
The dual threat of higher prices and growth rates has caused anxiety among consumers, business leaders and policy makers, not to mention Investors who have been dumping stocks And shovel up the bonds.
“In the direction, this is stagnant,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s the result of policy policy and immigration policy, which is higher inflation and weaker economic growth.”
This phenomenon has not been seen since excessive inflation and sagging growth in the 1970s and early 1980s, and has recently been shown primarily in “soft” data such as sentiment surveys and supply manager indexes.
Long-term inflation expectations are expected to reach its highest levels in nearly 30 years, while general sentiment is multi-year lows. Consumer spending fell in January Even if revenues have risen sharply in nearly four years, even if revenues have risen sharply, according to a Department of Commerce report Friday.
Monday, Survey of the Supply Manufacturing Institute of Purchasing Managers The results show that factory activity has hardly expanded in February, while new orders have dropped the most in nearly five years, with the highest monthly profit margins in more than a year.
According to ISM Report, Atlanta Federal Reserve gdpnow The specifications of the rolling economic data have reduced its forecast for first-quarter economic growth to 2.8% per year. If it ends, it will be the first negative growth figure since the first quarter of 2022 and the worst plunge since the closure in early 2020.
“Expectations of inflation have increased. People are nervous and uncertain about growth,” Zandi said. “In the direction, we are moving towards a stagnation, but we are not approaching the deadlock of the 70s and 80s because the Fed does not allow it.”
Indeed, the market is priced very well, and the Fed will start lowering interest rates in June and may draw three-thirds of the percentage points from the major lending rates this year to reduce any economic slowdown.
But Zandi thinks the Fed’s reaction may be the opposite – adding to the vein of former chairman Paul Volcker, who actively hiked in the early 1980s and dragged the economy into a recession. “If it looks like a real trap, growth is slow, they will sacrifice the economy,” he said.
Stock Sell
The convergence caused a wave on Wall Street, with stock sales in a sell-off mode this month, eliminating the gains Trump made after winning the election in November.
Even though the Dow Jones Jones industrial average fell again, the difference was about 4.5% by early March, sales were not particularly rushed, CBOE Volatility Indexa large amount of market fears were only around 23pm on Tuesday, not higher than its long-term average. The market is Their meeting lows In the afternoon transaction.
“This is certainly not the time to hit the panic button,” said Mark Hackett, chief market strategist in the country. “At this point, I’m still in the camp, which is a healthy reset to expectations.”
But not only stocks show signs of fear.
Fiscal yields have been falling sharply in recent days since September. The benchmark 10-year note yield fell to about 4.2%, about half a percentage point lower than its January peak and below three months of notes, and a reliable recession indicator can be traced back to the inverted yield curve of World War II. The yield is opposite to the price, so the decline in returns suggests that investors in fixed-income securities have greater demand.
10-year fiscal revenue in 2025.
Hackett said he was concerned that the activity created by emotional indicators of coma could turn into a mature crisis. Economists and business executives believe tariffs on food, vehicles, electricity and other items are at the price.
“Of course, pay attention to the present, more than it has been for a while,” he said. “We have to watch. It’s an emotional breakdown, and this change in the way people watch things, and the level of emotion is so high that it will start to affect behavior.”
The White House sees “America’s Greatest America”
For them, White House officials insist that short-term pain will dwarf the long-term benefits brought by tariffs. Trump touted his duty as a way to build stronger manufacturing bases in the United States, which is primarily based on the services-based economy.
Commerce Secretary Howard Lutnick admitted in a CNBC interview on Tuesday that “there is likely to be short-term price movements. But in the long run, it will be completely different.” Market-based inflation expectations are consistent with that sentiment. An indicator, measure Differences between the Ministry of Finance’s anti-inflation rate nominally for 5 yearsat its lowest level in the past two years.
“This will be the greatest in the United States. We will have a balanced budget. Interest rates will be lower, I mean 100 basis points, 150 basis points,” Lutnik added. “This president will deliver all of these things and push manufacturing here.”
Similarly, Treasury Secretary Scott Bessent told Fox News that there will be a transitional period, saying the government’s focus is more important than Wall Street.
“Wall Street has done a great job. Wall Street can continue to do a great job, but we focus on small businesses and consumers,” he said. “We will rebalance the economy and we will bring manufacturing jobs home.”
Important clues about the direction of economic development should come from Friday’s non-agricultural product salary report. If the number of jobs is good, it may reinforce the notion that hard data remains solid even if emotions change.
But if the report shows that the labor market is softening when wages are higher, it could increase stagnant chats.
“We have to observe. Just by talking about it, there is the potential to radiate the terminology,” said national strategist Hackett. “I’m not in a huge class camp, but it’s a disaster situation.”
