New research from Apollo Global Management highlights mounting economic strain in the U.S. as tariffs on goods from the Chinese mainland disrupt trade flows and dampen consumer confidence. The report warns of a potential 'stagflation' scenario—stagnant growth coupled with persistent inflation—as businesses slash investments and households curb spending.
Apollo Chief Economist Torsten Slok noted industries spanning transportation, hospitality, and retail are seeing recessionary trends, with Southwest Airlines, Chipotle, and PepsiCo executives reporting 'heightened consumer caution.' U.S. firms have cut earnings forecasts at the sharpest rate since 2020, while warehouse inventories surge due to slowing demand.
Trade dynamics between the U.S. and the Chinese mainland show notable cooling: container shipments from China to U.S. ports have dropped, freight rates are falling, and logistics activity has weakened. Meanwhile, consumer confidence hit record lows across income groups, with many anticipating higher unemployment and further economic decline.
Tourism sectors face dual pressures as international visits—notably from Europe—decline, compounding domestic spending cuts on travel and dining. Las Vegas hotel occupancy rates have dipped, reflecting broader financial caution even among wealthier households.
Apollo estimates a 50% or higher probability of a U.S. recession, emphasizing policymakers' limited tools to address stagflation. 'The tariffs are not just reshaping U.S.-China trade but straining global partnerships,' the report states, urging vigilance for potential product shortages and prolonged price hikes.
