Top Economist Warns of 65% Chance of ‘Stagflationary’ Recession

​If you thought inflation was yesterday’s problem, think again.

Adam Posen, president of the Peterson Institute for International Economics and a former central bank insider, just issued a stark warning: there’s now a 65% chance the U.S. falls into a stagflationary recession—a rare combo of high inflation and low or negative growth that hasn’t been seen since the 1970s.

The key driver? Trump’s trade war revival, which Posen says will ignite inflation regardless of whether a recession hits. “We may get recession, we may not—but we are going to get inflation either way,” he said in a speech this week.

Even if Trump reaches new trade deals, Posen argues that tariffs are likely to remain in place, which would push up prices, slow growth, and increase uncertainty—the three key ingredients for stagflation.

Posen didn’t stop there. He warned that Trump’s unpredictable policy style is creating the kind of chronic economic uncertainty that discourages investment and consumer spending—something the U.K. experienced after Brexit. He also predicted that other nations could start banding together to counter U.S. actions, further isolating American businesses.

Making matters worse, efforts to cushion the blow of tariffs—like subsidies for struggling industries—could pour more fuel on inflation, while companies protected by tariffs would gain pricing power and raise costs for consumers.

Even the Fed may be behind the curve. Posen believes it has already cut rates too far, and may soon need to hike aggressively if inflation resurges.

​Bottom line: The U.S. economy may be walking straight into a storm—and unlike in past cycles, it might bring both higher prices and slower growth, with no easy way out.