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Staff Writer with Agencies
Washington, D.C. – The Federal Reserve’s latest economic projections have raised alarms about the potential consequences of President Donald Trump’s economic policies, with experts warning of rising unemployment, inflation, and slowed economic growth.
On Wednesday, a former Obama administration economic adviser cautioned that the Fed’s revised forecast could signal a return to the “stagflation” crisis of the 1970s, where inflation and economic stagnation co-occurred.
The Federal Open Markets Committee (FOMC), responsible for setting U.S. monetary policy, downgraded its outlook for 2025, predicting that economic growth would slow to 1.7%, down from an earlier projection of 2.1%. Meanwhile, inflation expectations were raised from 2.5% to 2.8%.
“Recent indicators suggest that economic activity has continued to expand at a solid pace,” the FOMC noted in a statement, but it also warned that “uncertainty around the economic outlook has increased.”
Word of the day: stagflation. Fed projects slower growth and higher inflation. pic.twitter.com/UZXKZty7Tg
— Kathy Jones (@KathyJones) March 19, 2025
Tariffs and Budget Cuts Raising Concerns
Fears of a prolonged economic slowdown or even a recession have intensified since Trump implemented tariffs against major U.S. trade partners. His administration has also pursued significant reductions to social programs, including Social Security and Medicaid while supporting a $4.5 trillion tax cut largely benefiting wealthy individuals and corporations.
Federal Reserve Chair Jerome Powell acknowledged the risks of Trump’s policies, particularly his aggressive stance on tariffs. “Inflation has started to move up now, we think partly in response to tariffs,” Powell stated at a Wednesday press conference. “The survey data of both households and businesses show significant rising uncertainty and significant concerns about downside risks.”
Economic Experts Warn of Stagflation
Economic analysts and advocacy groups have reacted strongly to the Fed’s projections. The Groundwork Collaborative, an economic justice organization, argued that Trump’s policies are “steering our economy toward disaster.”
Alex Jacquez, a former adviser to the White House National Economic Council, emphasized that American voters expected lower living costs under Trump but are instead grappling with sustained high inflation and interest rates.
“Launching chaotic trade wars with our allies and gutting Social Security, Medicaid, and other vital programs to fund tax breaks for his billionaire donors isn’t making life more affordable for working-class families,” Jacquez stated. “It is, however, a perfect recipe for stagflation.”
Global Economic Fallout
The impact of Trump’s trade policies extends beyond U.S. borders. The Organization for Economic Cooperation and Development (OECD) has expressed concerns over the global economy’s trajectory, citing Trump’s trade war as a primary risk factor.
“The global economy has shown some real resilience, with growth remaining steady and inflation moving downwards,” said OECD Secretary-General Mathias Cormann. “However, some signs of weakness have emerged, driven by heightened policy uncertainty.”
Cormann warned that “increasing trade restrictions will contribute to higher costs both for production and consumption,” stressing the need for a stable, rules-based international trading system.
Uncertain Future Amid Political and Economic Volatility
The latest FOMC forecast comes as Trump prepares to escalate his trade war further, with new worldwide reciprocal tariffs set to take effect on April 2. Meanwhile, public confidence in Trump’s handling of the economy continues to erode. Polls indicate that a majority of voters disapprove of his economic policies, citing inflation and stagnant wages as key concerns.
As the U.S. economy navigates a turbulent period, economists warn that without a shift in policy direction, the nation may be on a collision course with economic hardship reminiscent of past financial crises.
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