Concerns over stagflation continue rising as U.S. tariffs spark economic turbulence and drive prices higher. Many economists fear a troubling mix of stagnant growth and surging inflation.
Tariffs on imports, introduced by the Trump administration, have pushed consumer prices higher across essential goods. Importers often pass these costs directly to American consumers, making everyday items more expensive. Recent surveys show rising inflation expectations among households.
Additionally, U.S. economic growth is now showing signs of slowing. Last week, Commerce Department data revealed that GDP fell 0.3% in the first quarter of 2025. That marks the first quarterly decline since early 2022.
Ellen Zentner from Morgan Stanley highlighted the warning signs in last week’s data. She believes the weak GDP numbers reflect a broader stagflation risk. According to her, tariff-driven slowdowns are already harming investor confidence.
David Bahnsen from The Bahnsen Group also expressed deep concern. He explained that tariffs cause cost-driven inflation, which the Federal Reserve cannot control through interest rate adjustments. The central bank usually targets demand-driven inflation—not one created by external policy shocks.
“Stagflation poses a unique challenge,” Bahnsen said in an interview. “The Fed’s tools are limited in this scenario.”
Moreover, Bahnsen expects the administration to eventually walk back the tariffs. However, businesses remain cautious. Many companies are delaying investments until they see clearer trade policy directions. That uncertainty is already hurting growth prospects.
He added, “The longer tariffs stay in place, the more pressure builds on both consumers and the labor market.”
Concerns over stagflation now dominate many economic discussions. Analysts warn that price hikes and reduced growth could slow job creation. The Fed faces a dilemma—tightening policy risks deepening the slowdown, but easing may fuel further inflation.
The future remains unclear. Until tariffs ease or economic conditions stabilize, concerns over stagflation will likely remain a central issue in financial and policy debates.
