Fed expects inflation to significantly rise this year.
FED still expects to cut rates twice this year.
These guys are clueless 😂
— tic toc (@TicTocTick) June 18, 2025
7 out of 19 Fed officials calling for 0 cuts this year.
Trump going to lose his mind.
— Tom (@TradingThomas3) June 18, 2025
Translation:
So higher inflation and lower growth.
CAN YOU SAY STAGFLATION???
Welcome to the 1970’s
— QE Infinity (@StealthQE4) June 18, 2025
Jerome we need to hike not cut 😂 https://t.co/7IdKDLUTx1
— Markets & Mayhem (@Mayhem4Markets) June 18, 2025
“Increases in tariffs are likely to push up prices and weigh on economic activity.” – Jerome Powell
Great Economic Strategy!
— Spencer Hakimian (@SpencerHakimian) June 18, 2025
The Federal Reserve just dropped its latest economic forecast, and it’s not a confidence booster. The central bank now expects the U.S. economy to grow at just 1.4% in 2025, down from the 1.8% it projected in March. That’s a sharp slowdown from the 2.8% growth posted in 2024. The Fed also raised its inflation forecast to 3%, up from the earlier 2.7% estimate. Unemployment is expected to tick up to 4.5%, compared to the current 4.2%. The message is clear. Growth is cooling. Prices are rising. Jobs are softening.
The Fed didn’t touch interest rates. They’re holding steady. But the tone has shifted. Officials are now openly acknowledging the risk of stagflation. That’s the economic trifecta no one wants: low growth, high inflation, and rising joblessness. The last time the U.S. faced this kind of setup was in the 1970s. The Fed’s own statement flagged “elevated inflation” and “weaker-than-expected activity.” The numbers back that up.
The personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, is now expected to rise 3% annually. That’s up from 2.7% in March. The consumer price index (CPI) is already running at 2.4%, and the PCE is at 2.1%. The Fed says tariffs haven’t fully hit prices yet. But economists expect the impact to show up this summer. Inventory cycles take time. The pressure is building.
Retail sales fell 0.9% in May, worse than expected. Manufacturing activity in New York dropped sharply. First-time jobless claims are hovering around 245,000 per week. The labor market is still tight, but the cracks are forming. The Fed’s balance sheet stands at $6.67 trillion, down from its pandemic peak but still massive. The M2 money supply is at an all-time high of $21.8 trillion. Liquidity is everywhere. Productivity is not.
The Fed is signaling caution. The data is flashing warning lights.
Sources:
https://thehill.com/business/5357633-fed-downgrades-economic-forecast-gdp/