Harsh tariff talks prompts some to expect an economic downturn. Unfortunately, this may all be the calm before the storm. Prospects of tariffs will disrupt an already fragile economic growth path. Other factors weighing against near-term growth include a weakened dollar, aggressive illegal immigration control, pauses in funding on government contracts, and looming increases in federal debt.

The Federal Reserve Dual Mandate is to maintain stable inflation and low unemployment. Unfortunately, today’s economy is characterized by both increases in inflation and unemployment. Stagflation is when economic growth turns negative. Raising rates too fast could result in recession. Lowering them too quickly could result in inflation. Fed policy can address one – not both.

Even prior to tariff talks, evidence suggested that the economy was drifting to a slower growth path. Job growth has slowed. Economic uncertainty rising among consumers and businesses with many struggling to keep up with inflation. Defaults on credit cards, student loans, and mortgages are rising. This all paints a picture of a slowdown.

Recent evidence suggests the U.S. economy may be drifting toward a slower growth path - becoming fragile. While job numbers can be volatile, job growth is slowing and trend toward further weakening. There are signs consumer is struggling under the weight of inflation.