Donald Trump’s handling of the economy is provoking concern among economists, with looming threats of stagflation as he implements aggressive tariffs and management changes. His advisers are alarmed by the potential consequences, particularly as the U.S. may experience a significant rise in prices without job growth. Historical context from the 1970s highlights how such a scenario can cripple an economy. As Trump prepares for large tariff increases, termed "Liberation Day," many fear this will worsen economic conditions, creating a self-inflicted crisis that could hinder growth and stability.
President Donald Trump is pushing the economy to a breaking point with sweeping tariffs and rapid cuts to immigration and the federal workforce. There is growing fear of not just a recession but stagflation, a frightful situation - not seen in the United States since the 1970s - in which the economy contracts and people lose jobs but prices remain high.
Stagflation can definitely happen, as the United States proved in the 1970s when inflation spurred by oil-price shocks and unemployment boosted by restrictive policies from the Federal Reserve gave the country the worst of all possible economic worlds.
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