CICC: The Biggest Risk to the US Economy is Still "Stagflation-like," Need to Be Cautious of Potential Risk Spillover

The research report from China International Capital Corporation (CICC) believes that the biggest risk to the U.S. economy is still "stagflation-like". Under the dual impact of tariffs and immigration policies, both demand and supply are currently being suppressed in the short term, and structural inflation may emerge in the medium term. The characteristics of "stagflation-like" have already been manifested through decreased consumer confidence, declining corporate investment willingness, and the deviation of bond market signals. At the policy level, a rate cut by the Federal Reserve may bring temporary relief, but it is difficult to change structural factors. Historical experience shows that "stagflation" is not simply a cyclical phenomenon but the result of the combined effect of policy, structure, and market expectations. In this context, it is necessary to be vigilant against potential risks overflow in the U.S. economy and the possible volatility that financial markets may face as a result.