A new Reuters report warns of an economic slowdown, dubbing it “stagflation-lite”—a period of rising inflation and sluggish growth, reminiscent of the 1970s crisis.
The key trigger? President Trump’s proposed tariffs on Mexico, Canada, and China, which could escalate trade wars and fuel economic instability. Experts predict these tariffs may increase U.S. inflation while simultaneously dragging down growth.
Signs of Trouble:
📉 Federal Reserve Reports: Businesses are passing higher costs onto consumers, pushing inflation up.
🛒 U.S. Retail Sales: A sudden drop signals weakening consumer spending.
💷 UK Inflation Spike: Surpassed the Bank of England’s target, while growth slows.
🏦 European Central Bank Warnings: Policymakers debate rate cuts to counter economic fragility.
📊 Bank of America Survey: A majority of fund managers expect stagflation to define 2025’s economy.
Investor Risks & Market Impact:
🔻 Stock and Bond Selloff: If stagflation fears materialize, expect heightened market volatility.
💱 Currency Instability: Emerging markets could face severe economic shocks.
💼 Portfolio Adjustments: Investors must prepare for a “stag” economy if inflation remains high.
With trade tensions rising, the risk of global economic stagnation is becoming more real. Is the market ready?
