Part 8/10:
The convergence of declining consumer confidence, shrinking manufacturing output, and a faltering housing market paints a clear picture: the risk of stagflation is increasing. Historically, stagflation is a challenging environment for policymakers because measures to combat inflation, such as raising interest rates, can further depress economic growth—creating a vicious cycle.
The current policy landscape, including aggressive trade tariffs, rising input costs, and geopolitical uncertainties, has acted as catalysts in this trajectory. The high inflation environment, coupled with slowing growth indicators, suggests that the economy may not soon return to a stable and healthy expansion.