Donald Trump’s economic program has gone from being a promise of growth, to become a threat to the pocket of Americans. Analysts and investors are questioning the positive impact of Trump’s arrival at the White House, and uncertainty about the imposition of tariffs has aroused the fear that one of the worst possible macroeconomic scenarios occurs: a return of inflation in the first economy of the world, which would be combined with an economic stagnation. In a few days, investors have made it clear that they are concerned about the macroeconomic signals that are emerging, such as the braking in the activity the services sector, or the last data of manufacturing activity. The rotation of investors, from the US stock market to the country’s bonds, is proof of the concern, and There are experts, such as Mohamed El-Erian, or James Knightley, Ing chief economist, who recognize the bad signs that the US economy is giving.
The last week of February has confirmed the turn of investors in their estimates for the US economy. The fear of the markets to a brake of growth resulted in strong entries in the country’s public debt, an asset to which money usually goes when macro forecasts give bad signals. The movement was so strong that it led to the bonus to mark new minimums of the year, in 4.2% of expiration, and the expectation that the Fed will have to be more aggressive this year with its type cuts, because it will need to give a boost to economic activity in the United States.
Investors have carried out this rotation for a reason: Negative signals are appearing for the US economyand in large part they have to do with Trump’s tariff policies, something that contradicts the expectations that had been set to date of the potential impact of the president’s economic plan.
The expert consensus has described Trump’s promises as inflationary and from the first moment it has been discounted that the president’s economic program would be positive for US growth, with the promise of tax declines, and deregulation, in the center of his project for the country. The problem is that the positive impact of its growth policies is now beginning to question, while an increase in inflation that can damage the citizens’ pocket is expected.
Stagnation signals
On Friday, March 21, the publication of a bad activity fact in the services sector was the first signal that investors alerts for the possibility of unexpected cooling. That day it was known how the first contraction in the activity of this sector had occurred in more than two years, and the CITI economic surprises index, which measures as positive, or negative, are being the data publications in the country, sank to the lowest levels seen since September 2024.
These signals have encouraged investors to seek shelters, and the movement towards fixed income has been the best demonstration, but they are not the only ones: the evolution estimation of GDP for the first quarter of 2025 that maintains the Federal Reserve of Atlanta is sinking quickly, and has gone from waiting 2.3%, last week, to estimate -2.8% for this period, which would be the confirmation that the economy would American is already being stopped at an accelerated pace.
The publication, this Monday, of the last fact of ISM manufacturing, a survey of the industrial sector that includes the amount of orders made by the factories of the country, among other things, has confirmed the threat that looms over the US economy, and relates the enormous uncertainty that there is at this time with the ignorance of where the tariffs by the administration will end.
In this sense, the price index paid by the industry, which includes the latest ISM survey, reflects the increase in inflationary pressures: The price index has reached 62.4% in February, compared to the estimates that were maintained, which aimed at 56%. It is one of the biggest surprises that have been seen in the history of the survey.
James Knightly, chief economist of ING, explains about the results of the survey how “the report of the manufacturing sector has been disappointing, with great falls in the new orders and in employment. Uncertainty for tariffs may be playing a role in this and, of course, it is taking companies to incorporate these risks into their prices,” he says.
This last statement suggests that one of the worst possible scenarios for the economy is starting to look out: stagflation. Mohamed El-Erian, Chief Economic Advisor of Allianz, and former CEO of the Pimco Manager, now recognizes that “the US economic data has a certain essence of stagning, and They add concern about the possibility that the only reliable world growth is playing economic twist, with one foot in stagnation, and a hand in inflation “says El-erian.
Inflationist pressure symptoms
The threat of a new resurgence of inflationary pressures has not been a discarded factor in recent months. The Federal Reserve itself insists that you need to see more progress of the disinflationary trend to continue lowering interest rates, which confirms that the Central Bank is still concerned about a possible rebound of inflation. The problem is that in recent weeks new signs have arisen that confirm the concern of the Fed.
First was the official inflation fact of the month of January, which was published on February 12. The consolidated inflation fact was higher than expected, both the underlying (the inflation that excludes fresh energy and foods), as the general. This bad signal was followed by an unexpected increase in the production price index, of 3.6%, compared to the 3.3% expected for the month of January.
Besides, Last week the greatest increase of the last two years was confirmed in the costs for the US industrial sectoraccording to the data collected by S&P Global, and an increase in the inflation expectations of consumers that measures the University of Michigan, to the highest level that has been seen since 1995.
On the part of the wages, inflationary pressures are also growing, and the last data that has been published with a salary growth per hour has reflected a 0.5%advance, the fastest pace that has been seen since September last year. All this is a cocktail that points to more prices pressures, and confirms the increase in the threat of stagflation on the US economy.
However, the most recent, and most worrying fact, which has been possible to receive, is the reading of the manufacturing ISM on Monday. In the same way that this survey has contributed to increase the fear of stagnation, it also gives signs that the pressures remain in the front of prices.
The ISM itself (Institute for the Management of the Offer) highlights in its statement some of the statements they have collected by the participants in the last survey. For example, in the food sector (where an inflationary crisis is being produced in some products, such as eggs), they recognize that “inflation and price pressures continue to generate uncertainty in our perspectives by 2025”. In the machinery industry they point out how “the arrival of tariffs is generating price increases in our products. Most of our suppliers are suffering increases in labor costs. Inflationist pressures are a concern,” they emphasize.
Among the outstanding messages by the institute are references to the enormous uncertainty that Trump’s commercial policy is generating, without having concrete news, a few hours after its entry into force, on what level the tariffs will have. According to some of these responses to the survey, this uncertainty has a lot to do with the braking of the activity that is producing in the US. “Our clients are still very reluctant to commit to long -term volumes, due to the enormous uncertainty generated by the proposal of tariffs on the import of aluminum and iron,” is one of the responses that ISM highlights by the metal industry.
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