TechFlow news — On March 5, according to Jinshi Data, U.S. President Trump initiated actions to impose tariffs on Canada and Mexico. Mark Zandi, Chief Economist at Moody's, believes the U.S. economy may fall into stagflation. Recent data indicate that American consumers and businesses are already concerned about the economic outlook and have reduced spending. This effect will lead to a significant economic slowdown, while tariff impacts will keep inflation high, potentially pushing the U.S. economy into stagflation. If true, this would mark the first time in 50 years that the United States has experienced stagflation.
The Atlanta Fed's GDPNow model shows that the U.S. economy could contract by 2.8% in the first quarter. If accurate, this would be the first contraction since the first quarter of 2022. Facing stagflation, the Federal Reserve might raise interest rates, similar to how former Fed Chair Paul Volcker aggressively hiked rates in the early 1980s, sacrificing economic growth to curb inflation.
