Economists have clearly downgraded their outlook for the U.S. economy, concluding that the war with Iran and rising energy prices will weigh increasingly heavily on economic activity in the coming months. At the center of these concerns are higher inflation, weaker consumption, slower GDP growth, and a deteriorating labor market. More and more often, the conflict in the Middle East is being viewed not as a temporary disruption, but as a new inflationary shock that could make it harder to maintain a balance between growth and price stability.
Inflation is once again becoming a bigger problem
According to a Bloomberg survey, the average forecast for growth in the PCE index—one of the most important measures of inflation in the U.S.—has risen for this year to 3.1% from the previous 2.6%. This is a significant shift, showing that economists are beginning to assume a more lasting impact…
