Fri Apr 04 12:50:00 UTC 2025: ## US Economy Faces Stagflationary Threat Amidst Slow Growth and Persistent Inflation

**NEW YORK** – The US economy is facing a challenging outlook, with forecasts pointing to sluggish growth and persistent inflation, according to a CNBC Rapid Update averaging the predictions of 14 economists. The first quarter of 2025 is projected to see a meager 0.3% GDP growth, a significant slowdown from the 2.3% reported in the fourth quarter of 2024 and the weakest since 2022. This weak performance is attributed to declining consumer and business sentiment impacting real economic activity, coupled with a surge in imports ahead of new tariffs.

Core PCE inflation, the Federal Reserve’s preferred measure, is expected to remain stubbornly high at around 2.9% for most of the year, only declining in the fourth quarter. While most economists predict a gradual rebound in subsequent quarters, reaching 2% by the end of the year, the risk of a recession remains.

Concerns are heightened by the Trump administration’s new tariffs, which are exacerbating the situation. Mark Zandi of Moody’s Analytics warns that given the global trade war and potential job cuts, there’s a significant chance GDP could contract in the first and second quarters. He adds that a recession is likely unless the president reverses course on the tariffs by the third quarter.

The persistent inflation complicates the Federal Reserve’s response. With core PCE inflation projected to remain elevated, rate cuts – anticipated by the market – may be difficult to justify until inflation shows more convincing signs of decline. The combination of slow growth and high inflation paints a concerning picture of stagflation for the US economy.

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