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The data released this week [July 28, 2025] that stagflation is now here. It suggests a near-term future of higher inflation in the context of a weakening economy and job market. This makes policy decisions on interest rates more difficult. The urgency to cut rates carries more weight in the context of the weakening of the labor market.
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.
