Stagflation or Recession: With Tariffs on Pause, Is the Economy Really OK?

Stagflation can be worse than a recession. Investors are already bracing for it. Getty Images/ DNY59/ Jeffrey Hazelwood Even if you haven't lived through a major recession, it's scary to think about. Even more frightening is stagflation, a combination of "stagnation" and "inflation." Last month, President Trump's turbulent tariff agenda resurrected fears of stagflation, a rare scenario in which prices increase while the economy slows and the labor market gets battered. Since February, new import taxes have been announced, delayed, raised and reduced in quick succession. After Trump's temporary truce with China this week, the risk of a severe economic crisis has fallen considerably. Markets are cautiously optimistic -- for now. Yet experts still warn that a trade war could drive up prices, curtail consumer spending and propel an economic downturn. The toxic combination conjures up the major economic crisis in the 1970s, marked by double-digit inflation, steep interest rates and soar ... Read full article.