Worse than stagnation? Trump’s tariff was subjected to “self -stagnation”

President Donald Trump The turbulent tariff agendaAlong with collective deportation and national debt increasing, created increasing fluctuations in the financial markets. Although many economists say there is a low risk of Standardization of jobsOthers say that we are at a critical crossroads, such as consumer and funny clips in the labor market.

Some analysts have assumed that the economy could revolve around the drainage towards stagnation, a rare scenario and a decoration of slow growth and high inflation. In the 1970s, the recession – a mixture of inflation and stagnation – a The main economic crisis It is characterized by two numbers, high -slope and unemployment rates.

In a study conducted by June Global Administration ApolloThe chief economist, Toristin Silok, warned of the continuous risks of stagnation. “The high customs tariff is a stagnation – it increases simultaneously the possibility of an economic slowdown with pressure on thunderbolt prices,” he wrote. “The current tariff system increases the chance of American recession to 25 % over the next 12 months.”

The recession is an economic diagnosis worse than the typical contraction, as the government lacks effective political recipes to control it. “There may not be an easy way for cash or financial stabilization,” he said. James GalbrithProfessor of Economics at Lindon Johnson College for Public Affairs at the University of Texas in Austin.

American families already Struggle to bear the high cost of livingThey are preparing for the next. Whether we are heading for recession or a period of recession, taking steps to proactively Protect your money It becomes more important.

Are we still at risk of recession?

Economic uncertainty often leads Stagnation conditions When companies and families begin to reduce spending and investment. During the recession, unemployment rises, and the prices of goods begin to decrease. It is generally difficult to obtain financing, as banks tighten their requirements to reduce the risk of lending to borrowers who may be lagging behind loans.

The economy regularly tests periods of mutations and bust, with declines every five to seven years. “It is scheduled to reset and slow the economy,” he said. Greg ShareThe Managing Director of NFM LENDING.

Some distinctive signs of macroeconomics, such as gross domestic product and High unemploymentConsistent in all stagnation. But every American recession is also unique, with a different historical operation. The great recession 2007-2009, which started with the sub-mortgage crisis and the collapse of financial institutions was the longest. The Covid-19 epidemiological recession, resulting from the lock and the loss of 24 million jobs, was the shortest stagnation ever.

The families of the working class and the middle class are facing the daily difficulties of the stagnation before National Office for Economic Research Official call. People on the margin also test a much slower recovery after the recession has ended.

Dependence on difficult data such as gross domestic product and employment Road identification It is defective. Because these numbers with a backward appearance, they tell us where the economy was before, and not necessarily where to go. Many economists notice this Unemployment is worse From the title of the title numbers.

Below are some of the main warning signs of stagnation:

Decreased GDP (GDP)	A continuous decrease (usually two consecutive quarterly) in the total commodity and services output in the country, the economy is shrinking.
High unemployment	When companies reduce costs, rest and increased layoffs for a sustainable period. Families receive less income and less spending.
Reduced retail sales	When people buy fewer commodities in stores and online, this indicates poor demand, which is a major engine for the economy.
The stock market declined	It often reflects a significant and permanent decrease in stock prices invested about the future of the economy.
The inverted return curve	When interest rates on short -term bonds become higher than long -term rates, it can indicate that investors expect a weaker economy in the future.

Can we face the recession?

The recession may mean that you have less purchasing power with high prices and savings become more difficult. Jobs become more difficult to find, and investments may take visits and Use rates may rise. The recession is usually measured by “”The misery index“The total unemployment rate and the rate of inflation, which reflects the level of economic distress that the average person feels.

For decades, experts did not think that the recession was possible because it contradicts the basic principles of supply and demand. Usually, when more people are unemployed, prices decrease because the demand for goods and services is lower.

But the recession began to raise his head in the seventies. The increasing government debt, which is fueled by military spending on the Vietnam War, sent prices. Soon after, the energy crisis was struck. In 1973, OPEC’s oil ban was shocked in the enormous supply, aggravated inflation and frustrated production.

The official unemployment reached its climax by 9 % The inflation continued to rise In the end, he exceeded 14 % on an annual basis. The shock of the second oil supplies in 1979 prompted the federal reserve to raise interest rates for highlands, above 20 %. While this approach has reduced inflation, it has pushed a severe stagnation.

Most economists say that the possibility of entering a period of recession is still very low, but others like Slü warn that Trump’s commercial policies It can feed the fire. At the same time, the dollar and public budgets of major financial institutions are much stronger than the 1970s.

What role does definitions play?

Since February, new import taxes have been announced, delayed, declined and lowered in a quick sequence. If customs duties are implemented at the end as announced, the average rate of imports is The highest in a centuryReturn to the levels that have last seen during the great depression.

Definitions, which are import taxes on goods from another country paid by the importer, can have a similar effect of oil supply shocks, causing widespread disturbances and increased cost along supply chains. Companies transfer these increases to local customers, which leads to more inflation, or they reduce investments and production, which leads to demobilization of workers and weak growth.

“The big definitions at the present time will not increase inflation – they can raise a series of economic interactions that banks and central governments are not ready to deal with,” said Sher. According to Sher, there is a misleading assumption that consumers will be ready to pay the cost of the higher goods caused by the definitions. “Consumers are likely to sit at their hands and stop spending, which will increase the Hyran of the recession,” said Sher.

There are signs that the uncertainty related to the tariff causes cracks in the labor market. Although unemployment is still relatively low, currently 4.1 %, according to the work statistics office, the employment and those currently operating are almost impossible to find a profitable work.

Is there an inflation solution?

There is a play book, if it is incomplete, to reduce the recession effect. The federal reserve, which is responsible for maintaining prices and increasing labor, usually reduces interest rates to stimulate the economy and buoy workers during the decline.

However, when inflation is high, the Federal Reserve raises interest rates to combat prices and slow the economy by obtaining credit and Borrowing is more expensive For consumers and companies. Currents cannot be taken at the same time.

“The prices fall alongside the company, and growth may be cooled from a very large pace, unemployment is still closer to its lowest historical levels,” unemployment said. Keith GammangerVice President at HSH.com News. “We do not stagnate itself, at least yet.”

Gammans said that the recession is more exciting than stagnation. It has a more difficult path because policies that are used to address one problem often worsen the other.

now Federal Reserve Bank in a link. Low interest rates can enhance the weakest economy, but it can also be inflation. If inflation remains sticky, it is likely that the central bank will continue to cut interest rates. Usually, the issuance of policy advertisements in the knee, only to delay or reversal after weeks, making it difficult for policy makers a correction.

This type of government paralysis can Pull economic hardshipsEspecially for the most weak and social population. While the average recession lasts about 11 months, the last stagnation in the United States has lasted more than 10 years.

If the recession or recession is achieved, then this will be a “self -connecting” injury resulting directly from the US government’s policy. Catherine Ann EdwardsEconomists and independent policy consultant.

How can you prepare for economic deflation?

The recession may feel like a stagnation with additional pain from the high prices, making it difficult to prepare for it and even difficult to move. However, experts say you want to take Some of the same steps I was before the economic shrinkage.

Create your emergency box. The presence of an emergency box It is a good idea in any economy. During the economic contraction, it can make high unemployment it is difficult to return to a strong financial position if you have a sudden expense. If your savings cover at least three to six months of living expenses, you can easily overcome a financial storm without relying on credit cards or retirement savings.

Developed. Focus on payment of debts, especially High -interest credit card debtsSo you do not have to bear a balance when the times are more strict. Postponement of any major purchases that extinguish your budget and that you will regret ensure that its fruits are given within a year or two. Avoid buying panic Things such as laptops, phones, or cars just to advance the expected increases in prices.

See your own Investments. Given the level of economic uncertainty, the stock market expects greater fluctuations. If you often have highly dangerous investments, think about diversification with a variety of low -risk accounts, or the combination of stocks and bonds. Consult an advisor on inflation resistance assets and a more balanced wallet based on individual tolerance of risks, age and financial goals.

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