The United States economy is facing rising stagflation risks as weakening activity collides with persistent inflation pressures, according to Betashares chief economist David Bassanese.
The warning comes as the US labour market unexpectedly deteriorated in February, with non-farm payrolls falling by 92,000 and the unemployment rate rising to 4.4 per cent.
Bassanese said the data highlighted the difficult economic environment confronting policymakers.
“The United States economy is now confronting the dilemma of both weakening economic activity and stubbornly persistent inflation – a combination otherwise known as ‘stagflation’, which is the worst of all worlds for bond and equity markets,” he said.
Although February’s labour market weakness was partly due to temporary factors, Bassanese said it also reflected broader cooling in employment demand and…
