Under the "double squeeze" of Trump's tariffs, the US economy is sounding the alarm for stagflation.

According to the latest survey, the uncertainty of the Trump administration's policies, combined with comprehensive new tariffs, is pushing the U.S. economy towards a stagflation scenario. A survey conducted by 14 economists on GDP and inflation forecasts indicates that economic growth for the first quarter is expected to be only 0.3%, significantly slower than the 2.3% in the fourth quarter of 2024, potentially the weakest performance since the pandemic recovery in 2022. At the same time, the core PCE inflation index favored by the Federal Reserve is expected to remain at a high level of 2.9% for most of the year, only dropping back down in the fourth quarter. Behind the bleak GDP forecast, the decline in consumer and business confidence has already begun to show in actual economic activity. Data from the U.S. Department of Commerce shows that real consumer spending adjusted for inflation in February only increased by 0.1%, compared to a contraction of -0.6% in the previous month. Action Economics has significantly lowered its expectations for spending growth this quarter from 4% in the fourth quarter to 0.2%. A report by Barclays points out: "As confidence indicators deteriorate, evidence of slowing economic activity is becoming more compelling." Another factor is the surge in imports into the U.S. before the tariffs took effect (imports can lower GDP statistics). The good news is that the impact of import surges will weaken, with only two of the 12 economists surveyed predicting negative growth for the first quarter, and no one expecting the economy to continue to contract. The lowest forecast, from the Oxford Economics Research Institute (-1.6% in Q1), believes that import drag will continue, but predicts a rebound in GDP to 1.9% in the second quarter, as these imports will eventually be converted into growth momentum through inventories or sales channels. Rising recession risks Most economists predict a gradual recovery in the economy: GDP growth rates of 1.4% in the second quarter, 1.6% in the third quarter, and rising to 2% in the fourth quarter. However, the danger lies in the fragile 0.3% growth easily slipping into negative territory. With the new tariffs taking effect this week, not everyone is confident in a rebound. Mark Zandi, chief economist at Moody's Analytics, warns: "Although baseline forecasts do not show actual GDP contraction, considering the escalation of global trade wars and the cost-cutting measures of the Department of Government Efficiency (DOGE), GDP in the first and second quarters this year may likely experience negative growth. If the president does not roll back tariffs before the third quarter, an economic recession may become inevitable." Moody's predicts growth of only 0.4% in the first quarter, rising to 1.6% by the end of the year, still below trend levels. Continued inflation will make it more challenging for the Federal Reserve to deal with slowing economic growth. Core personal consumption expenditure (PCE) growth rate is expected to be 2.8% this quarter, rising to 3% next quarter, and staying at this level until a year later when it drops to 2.6%. Although the market seems to expect interest rate cuts from the Federal Reserve, it may be difficult for the Federal Reserve to justify a rate cut unless inflation starts to visibly decrease towards the end of the year.