JP Morgan Chase CEO Jamie Dimon warned earlier this year about the potential for stagflation, a condition characterized by stagnant growth and rising inflation. The recent tariff proposals by President-elect Donald Trump have reignited the debate on whether stagflation is a possibility. The implementation of broad-based tariffs could have negative impacts such as higher consumer prices, disrupted supply chains, and retaliatory measures from trading partners. However, experts are divided on the potential fallout from these proposals, with some suggesting that the inflationary impact might be limited to an initial surge. The risk of stagflation grows if other countries retaliate with tariffs on US goods, potentially leading to job cuts and delayed investments. While some economists caution about the risk of stagflation, others believe that it remains a worst-case scenario rather than the baseline forecast. They note that sufficient time for businesses to adapt to higher tariffs could mitigate the economic shock. Nouriel Roubini, a prominent economist, warns that unchecked implementation of Trump's policies could increase the risk of stagflation. However, Wells Fargo economists project a "modest stagflationary shock" if the tariffs are enacted, with higher near-term inflation and slower growth. They also highlight significant uncertainty around future policies.



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