Intuitive fred888: Does it look like we are entering Stagflation?

Tuesday, September 23, 2025

Does it look like we are entering Stagflation?

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It is difficult to say definitively if the US is entering stagflation, but many recent reports from September 2025 suggest that the economy is showing concerning signs of both slowing growth and persistent inflation. These warning signs include contracting manufacturing, falling job growth, rising unemployment, and sticky inflation in essentials, leading some economists to believe the economy is moving toward stagflation.

What are the signs of stagflation?

Stagflation is a rare economic phenomenon characterized by three simultaneous problems:

High and persistent inflation: Prices for goods and services continue to rise, especially for essential items like food and energy.

What are the specific warning signs for the current economy?

As of September 2025, several signs are pointing to potential stagflation:

Job market slowdown:

Job growth is falling below expectations, and unemployment is creeping higher.

The manufacturing sector is contracting while prices for its goods are rising.

Inflation, especially in essential goods and services like food and energy, is proving persistent and not easily coming down.

Forecasts for economic growth are being significantly cut.

What could cause it?

Stagflation can stem from a combination of factors:

Supply-side shocks:

Sharp increases in the prices of essential commodities, like oil, can drive up costs.

Restrictive trade policies, tariffs, and other government actions can stifle economic activity while increasing prices.

Fractures or issues in global supply chains can lead to higher prices and slower growth.

Is stagflation inevitable?

No, full-blown stagflation is not guaranteed. It depends on a range of factors including:

Central bank decisions: Actions taken by the Federal Reserve.
Energy price movements: Future developments in oil prices.
Geopolitical developments: Global political events and their impact on economies.
Government policies: The specific economic policies implemented by the administration.

As US edges closer to stagflation, economists blame Trump policies
Sep 13, 2025 — “We've seen growth forecasts for the remainder of this year cut substantially, and we have seen inflation forecasts pu...
The Guardian