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Wall Street stocks fell on Friday as signs of strain among US consumers added to worry that the US is heading for a period of staggation.
A group of data on Friday added new evidence that consumers are growing deeply concerned about how Donald Trump’s comprehensive tariffs will affect the largest economy in the world, while a special report showed that the preferred federal reserve inflation rate increased in February.
Bleeding data comes at a time when investors are concerned that Trump’s trade taxes combined with a broader sense of uncertainty will undermine US economic growth, while also increasing price pressures. The new reports sent investors who rushed away from US capital and shelters.
Wall Street’s Blue Chip S & P 500 dropped 1.8 percent in the afternoon trading Friday while the technology -centered Nasdaq composition was 2.5 percent lower. The US government’s debt gathered, postponing the 10-year treasury rating below 0.1 percentage points to 4.27 percent.
“USA’s data are just the fear of stagflation,” said James Knightley, an economist at the investment bank. “Hot inflation and cooling of consumer spending are a tendency that is likely to be intensified by President Trump’s aggressive movements on tariffs and cuts of government spending.”
A study by the University of Michigan released on Friday showed that the consumer’s feeling was plunged into Mars while Americans worried about their work prospects, inflation and income level. Families also predict inflation for a long term of 4.1 percent, the highest since 1993.
“The fall of this month (in the feeling) reflects a clear consensus in all demographic and political affiliation,” the University of Michigan said.
She added: “The Republicans united independent and democrats in expressing expectations of deterioration from February for their personal finances, business conditions, unemployment and inflation.”
Consumer spending, meanwhile, increased 0.4 percent last month, an overthrow of 0.3 percent of January, but not as strong as the prediction of economists with 0.5 percent growth, a special report from the US Economic Analysis Bureau.
Pantheon’s top macroeconomic economist Oliver Allan said that consumer expense data were “disappointing” and that a “basic slowdown of demand growth also seems to be developing”.
Goldman Sachs shorten its forecast for the first quarter GDP in response to poor data, with 0.4 percentage points at an annual growth rate of 0.6 percent, citing increased personal costs than expected “in February and a declining review of January.
Atlanta Fed also shorten its forecast for the GDP of the first quarter to indicate a contraction of 2.8 percent on an annual basis, compared to 1.8 percent earlier than Wednesday. Its model has contracted with Wall Street banks, which are widely awaiting growth in early 2025.
The EUA report also showed that the essential reading of the personal consumer cost (PCE) price index increased 2.8 percent in February a year earlier.
Economists were expecting the index, a mass that is closely viewed by the Fed which removes food and energy, to increase 2.7 percent, unchanged from the revised above of January. The main PCE index increased 2.5 percent last month, unchanged from January.
The FED earlier this month increased its prediction of inflation and trimmed its growth perspective. Fed President Jay Powell said at the time the US economy was still in good shape and the central bank “does not need to be in a hurry” to lower interest rates after lowering them by 1 percentage point last year.
However, the president of the Fed Agoikagos branch, Austan Goolsbee, told Financial Times this week that the Central Bank was no longer on the “Golden Road” of 2023 and 2024 when inflation seemed to turn 2 percent without raising economic growth or increasing unemployment.
