U.S. Faces Rising Stagflation Risks Amid Weak Spending, Inflation Spike

The U.S. economy is showing signs of stagnation coupled with rising inflation, raising concerns about a potential stagflation scenario reminiscent of the 1970s. Recent data indicates consumer spending grew only 0.1% in February, while inflation rates accelerated, with long-term inflation expectations reaching a 32-year high, according to a University of Michigan survey. Financial analysts warn that the combination of weak consumer confidence and rising prices could hinder economic growth, with the Federal Reserve downgrading its growth forecast for 2025. The ongoing trade tensions and tariffs imposed by the Trump administration are contributing to these inflationary pressures, complicating the Fed's monetary policy decisions. As consumer sentiment declines and inflation remains stubbornly high, economists express fears that the Fed's ability to lower interest rates may be constrained. This precarious economic situation underscores the urgency for policymakers to address the emerging risks of stagflation.