https://www.theatlantic.com/magazine/archive/2025/06/trump-economy-tariffs-stagflation/682572/
Some of you may remember the bad old days of stagflation during the 1970s. Stagflation is the economic triple-whammy defined thus:
Stagflation: An economic state where high inflation occurs alongside stagnant economic growth and high unemployment.
I'll get to the article at the URL above, but first I'll say that I'm increasingly optimistic that the Trump regime (an "administration" has to actually administer with base-level competence) appears to be in full retreat on just about every front. The opposition, stunned by the brass-balled fascism of the first couple months of the regime, is coming together fast, and the regime's greatest weapon, fear, is losing its efficacy. This is not to say the fight is over, but the regime's blitzkrieg is grinding to a halt as Democratic- and Republican-appointed judges at every level of government (including Trump-appointed judges) are handing the fascists one defeat after another. All this despite the protests on the streets just barely getting started, and the bite of tariffs having barely sunk in on Main Street (Wall Street steers by different stars).
Okay, so about that article up there. It was authored by David Frum (a Republican), and these are the highlights:
In January, President Trump inherited an economy that was growing strongly. Unemployment was low. Inflation had been restrained below 3 percent. If the new Trump administration had just left well enough alone, his second presidency could have coasted to economic success.
Instead, Trump single-handedly plunged the economy into chaos. In the ’70s, the economy was disrupted because the price of oil surged, a result of the major oil producers’ coordinated restriction of supply. Trump’s tariffs are like a hundred self-inflicted oil shocks, all arriving at the same time. Unless Trump changes course immediately, everything will soon cost more, possibly a lot more: groceries and automobiles, industrial magnets and tableware, mobile phones and children’s shoes...
...No American business—no business that serves the American market—will commit to any capital expenditure under these conditions. If Trump’s tariffs last for any length of time, the result will be a vast disinvestment instead. The worst of the pain may not be felt immediately. Trump advertised the tariffs many weeks in advance, opening an opportunity for businesses to stockpile inventories. Sooner or later, however, those stockpiles will dwindle. Consumers will face higher prices or outright shortages. Businesses will suffer diminished demand. Workers will be laid off.
Really, everything said in that last paragraph should have been obvious to anyone paying attention. Even the purported purpose of the tariffs—to bring manufacturing back to 'Murica—is in conflict with the current narrative by the regime that the idea is to "make deals" resulting in tariffs coming back down to earth. Really? Then why should manufacturers bother setting up shop in the US? But anyway, back to the article...
The most dangerous temptation that Trump may face is to impose some form of capital controls to stop investors from dumping dollar assets. Trump’s trade war has driven a sell-off of U.S. Treasury bonds, which raised interest rates in the United States. Regimes moving toward protectionism sometimes try to block investors from rushing to the exits. The United States has more capacity than most to try such measures. Among their many costs, they dissuade investors from ever trusting your country again.
This is to say that strong-arm tactics to dictate to investors will only scare away investment in the US, thus further weakening the economy.
Here's the upshot of the analysis:
1) Obviously the tariffs are a recipe for inflation.
2) The tariffs are also looking increasingly likely to trigger a recession, which is of course worse than stagnation. Let's just say stagnation is nearly a certainty.
3) The third whammy, unemployment, will be a consequence of businesses experiencing lessened demand for their goods and services. This will result in workers being laid off.
@Soothfast
Goldman Sachs already warned us about the potential for stagflation in March. And those guys can calculate.
I'm fairly certain that Trump will look into how to change how the GDP is calculated so it will look better. The US is not in a recession yet. I'm fairly certain we won't see it until Q3 (Q2 and Q3 will have negative growth).
I don't know what will have the biggest influence on Trump. The fact that the US have to re-finance $9 trillion before the end of the year or that a lot of major industries are speaking up. But what Trump is doing is not better for the US economy in any way, they'll have a hard time lying and putting the blame on Biden/Obama this time, and they will have to change what they are doing.
Of course, the tourist decline will continue, companies will look into moving the US services to competitors, and it'll take time moving production out of China if that ends up being necessary. But lets say Walmart moves it's shirt production to India. Who knows what kind of tariffs Trump will put on India tomorrow or the day after? Even if they make a deal, I expect all governments know that a deal with Trump is worth less than something you flush.
So, either way Trump has dug a whole for himself and no amount of lying can change the facts; The US economy is in trouble.
@Soothfast saidOne could add to that Trump's stated determination to deport every undocumented immigrant an estimated 7.5 million of whom are gainfully employed.
https://www.theatlantic.com/magazine/archive/2025/06/trump-economy-tariffs-stagflation/682572/
Some of you may remember the bad old days of stagflation during the 1970s. Stagflation is the economic triple-whammy defined thus:Stagflation: An economic state where high inflation occurs alongside stagnant economic growth and high unemployment.
I'll ge ...[text shortened]... eriencing lessened demand for their goods and services. This will result in workers being laid off.
Still, the US economy is pretty resilient and Trump has already started backing down from his most destructive economic policies. Stagflation in the US still seems unlikely.
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@no1marauder saidTrump has put himself in a bind. Not everyone who voted for him lives in a padded silo like the AvJoes of the world, where every move Trump makes is genius by definition. So either Trump backs down in the trade war, thereby losing credibility with a chunk of his voters; or he presses on, causing incalculable damage to the economy and credibility of the nation, which again will cost him support. Whether a recession occurs or not will, at this stage, depend on whether he backs down or not. If he backs down, yes, I would wager that a recession and even stagnation can be averted. With a madman on the throne, anything is possible.
One could add to that Trump's stated determination to deport every undocumented immigrant an estimated 7.5 million of whom are gainfully employed.
Still, the US economy is pretty resilient and Trump has already started backing down from his most destructive economic policies. Stagflation in the US still seems unlikely.
Meanwhile, Trump is busy decimating two commodities where the US has enjoyed a trade surplus relative to other nations for generations: tourism and education.
When international students with valid visas as being kidnapped by federal goons or being ordered to "self-deport" under threat of imprisonment, there's no question but that prospective students will think twice about coming to the US to study.
https://www.aljazeera.com/news/2025/4/18/us-revokes-nearly-1500-student-visas-who-are-the-targets
When nations that are supposed to be US allies are issuing travel advisories to their citizens because tourists are being incarcerated, a precipitous drop-off in tourism can be expected—never mind the loss of trust in the US resulting from talk of annexing Greenland or Canada, abandoning Ukraine to Putin's Russia, and starting reckless trade wars.
https://www.pbs.org/newshour/world/u-s-detention-of-european-and-canadian-tourists-creates-fear-over-traveling-to-america
https://www.npr.org/2025/03/22/nx-s1-5336792/european-countries-canada-travel-warnings-us