Persistent inflation in the US is amplifying concerns over trade policy impacts, with tariffs contributing to rising consumer costs and eroding economic optimism. Recent data from the US Bureau of Labor Statistics reveals February's Consumer Price Index (CPI) surged 2.8% year-on-year, while core inflation—excluding volatile food and energy prices—rose 3.1%, far exceeding the Federal Reserve's 2% target. This follows a sharp January decline in consumer spending, dropping 0.2%—the steepest fall since 2020.
A Conference Board survey underscores growing public anxiety: February consumer confidence fell seven points to 98.3, missing forecasts and marking the largest monthly drop since August 2021. Pessimism about the labor market hit a 10-month high, compounding fears of stagflation as GDP projections suggest a potential 1.5% contraction in early 2025.
Analysts link these strains partly to sustained tariff pressures, which have increased import costs for households. Xue Tianhang, a researcher at Zhejiang University, warns that prolonged inflation could weaken global trade ties, with Asian markets monitoring ripple effects. Investors are scrutinizing Federal Reserve responses as business leaders advocate for recalibrated fiscal strategies.
