'Not good': Ex-Trump official sounds alarm on ominous economic signals
Former Donald Trump administration adviser and Fox News economic commentator Larry Kudlow delivered some ominous words for the president in a segment Friday, warning that key economic indicators signal stagflation could be brewing.
"There could be some short-term, one-off price hikes," said Kudlow on Fox Business. "But at least for now, the economic signals are flashing slower growth and higher inflation. Not good."
President Donald Trump inherited a strong, if still slightly overheated, economy from former President Joe Biden, with jobs numbers hovering around full employment and inflation significantly down from the last few years. However, Trump's plans for large, across-the-board tariffs on energy, materials, and goods from several key U.S. trading partners, as well as mass deportation plans that could disrupt agriculture and construction, alarmed many economists even before the election.
For now, Trump has delayed tariffs on Canada and Mexico by a month.
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Stagflation describes an economy with high inflation and simultaneously slow — or shrinking — job growth. Usually, high inflation is correlated with low unemployment and vice versa, so stagflation spells are uncommon. A frequent cause of stagflation is a sharp drop in the supply of materials or inputs to the economy, which happened during the oil crisis of the 1970s — and a large-scale trade war could produce such an effect.
Nobel laureate Joseph Stiglitz has further warned this week that the massive purges of the federal workforce and suspensions of government grants could also destabilize the economy by discouraging investment from overseas. “The government has a huge number of contracts and we’re just tearing them up. How much risk do you want? The US has become, I would say, a scary place to invest," he said.