⚠️ The U.S. economy is moving towards the worst-case scenario - stagflation
After the start of the war between the United States and Iran, oil rose sharply: in just a few days, the price rose from $70 to +$90 (↑28%). Since the last inflation report, oil has risen in price by about $20.
Important: every $10 of oil growth adds about 0.2% to inflation in the United States and takes away 0.1% of economic growth💸
Now CPI in the United States is 2.4%, and GDP growth is 1.4%. Taking into account the oil jump, inflation may rise to about 3%, and economic growth may slow down to 1.1-1.2%. Это классическая стагфляция: инфляция растет, а экономика замедляется.
The Fed is at an impasse:
▪️ raise rates - slow down the economy more
▪️ reduce rates - disperse inflation
The main hope of the markets is a quick settlement of the conflict and a fall in oil prices. Optimists still remained, despite Trump’s willingness to fight forever for the complete surrender of Iran.
After the start of the war between the United States and Iran, oil rose sharply: in just a few days, the price rose from $70 to +$90 (↑28%). Since the last inflation report, oil has risen in price by about $20.
Important: every $10 of oil growth adds about 0.2% to inflation in the United States and takes away 0.1% of economic growth💸
Now CPI in the United States is 2.4%, and GDP growth is 1.4%. Taking into account the oil jump, inflation may rise to about 3%, and economic growth may slow down to 1.1-1.2%. Это классическая стагфляция: инфляция растет, а экономика замедляется.
The Fed is at an impasse:
▪️ raise rates - slow down the economy more
▪️ reduce rates - disperse inflation
The main hope of the markets is a quick settlement of the conflict and a fall in oil prices. Optimists still remained, despite Trump’s willingness to fight forever for the complete surrender of Iran.