The U.S. economy sharply disappointed economist growth estimates last quarter, yet it surpassed price pressure predictions, indicating that inflation is weighing on real economic activity — a scenario typically referred to as stagflation. The gross domestic product (GDP) advanced at a 1.6% annualized rate in the first quarter of the year, significantly slowing down compared to both the 3.4% growth in Q4 2023 and the 2.5% expected. It also marks the lowest expansion since the contraction in Q2 2022. Simultaneously, price pressures — as indicated by the Personal Consumption Expenditure (PCE) price index — rose during the quarter. The headline PCE price index recorded a 3.4% quarter-on-quarter annualized increase, up from 1.8% earlier, while the core PCE price index — the Fed’s preferred inflation gauge —soared from 2% to 3.7%, above the expected 3.4%. Economists and market experts weigh in on the numbers released Thursday by the Bureau of Economic Analysis. Experts Signal Rising Stagflationary Risks For The US Economy “For those who do not understand what just happened, we have a weakening economy with rising inflation: The worst possible outcome for the Fed,” the Kobeissi Letter wrote on social media X. Mohamed El-Erian, chief economic adviser at Allianz, emphasizes that any hope pinned on the recent US GDP data to alleviate pressure ...