TechFlow news — On March 5, according to Jinshi News, while concerns over inflation resurgence linger, the outlook for U.S. economic growth is beginning to worry markets, sparking fears of "stagflation." Mark Zandi, chief economist at Moody's Analytics, said: "By trend, this is stagflation. It’s higher inflation and weaker economic growth driven by policy—tariff policy and immigration policy."
U.S. stocks have remained in a selling phase this month, erasing all gains since Trump's election victory in November last year. As of early March, the Dow Jones Industrial Average has fallen roughly 4.5% cumulatively. However, market panic has not surged sharply—the VIX index stood at around 23 in the afternoon of March 5, only slightly above its long-term average. Mark Hackett, chief market strategist at Nationwide Insurance, said: "This certainly isn't a time of panic. Right now, I still see this as a healthy market correction within expectations."
Notably, warning signs are emerging in the U.S. Treasury market. The benchmark 10-year Treasury yield has dropped to about 4.2%, down approximately half a percentage point from its peak in January, and has fallen below the 3-month Treasury yield, resulting in an inverted yield curve—a reliable indicator of recession since World War II. Hackett warned that weakening confidence indicators could trigger a "vicious cycle," emphasizing: "Stagflation truly deserves attention now—more than ever before. We must watch it closely. Market confidence has declined significantly, perceptions have shifted dramatically, and sentiment is highly elevated, all of which will start affecting people's behavior."
Multiple economic indicators suggest a slowdown in U.S. economic activity: long-term consumer inflation expectations have reached their highest level in nearly 30 years, while overall consumer confidence sits at a multi-year low; although personal income surged in January, consumer spending recorded its largest drop in nearly four years; factory activity in February showed almost no expansion, with new orders posting their sharpest decline in nearly five years, while prices registered their biggest monthly increase in over a year. The Atlanta Fed has cut its first-quarter GDP growth forecast to -2.8%.
The market expects the Federal Reserve to begin cutting interest rates in June and potentially lower the benchmark rate by 75 basis points this year to counteract the economic slowdown. U.S. Commerce Secretary Howard Lutnick acknowledged that prices may fluctuate in the short term but insisted that long-term benefits would outweigh short-term pain. Investors will closely watch Friday's upcoming nonfarm payrolls report for critical clues on the direction of the U.S. economy.
