The next big financial crisis may be brewing. Warning signs are already there | Larry Elliott

"US job creation has stalled and, despite the curbs on migration, unemployment is rising. Tariffs are pushing up the cost of imports. And Donald Trump is at war with the governor of his own central bank and wants him out. But traders on Wall Street are not bothered by the fact that inflation is above the target or that growth is slowing. Share prices are testing new record levels on an almost daily basis."

"Jerome Powell, the man Trump wants to be rid of, says stocks are fairly highly valued, which is an understatement if ever there was one. By historical standards, stocks are extremely highly valued. There is trouble perhaps big trouble ahead. Recessions happen rarely and the same goes for financial crashes. Both are predicted more often than they materialise. Leaving to one side the exceptional circumstances of the 2020 pandemic,"

US job creation has stalled, unemployment is rising despite migration curbs, and tariffs are increasing import costs. Political pressure on the Federal Reserve includes calls for the governor's removal. Stock markets keep reaching record highs despite slowing growth and inflation above target. By historical measures, equity valuations are extremely high, raising the risk of significant trouble. Long intervals without crises breed complacency, and younger traders lack experience of genuine market panics. In the UK, growth is weak while inflation runs near double the Bank of England's target, and budget tax speculation is undermining consumer and business confidence. Wall Street's rally rests on a bet that AI will boost growth.

Read at www.theguardian.com