'Even the rich are worried': Columnist warns economy headed to 'frightful situation'

President Donald Trump might push the U.S. into an economic situation not seen since the 1970s, a columnist warned Monday.

Many of the president's economic advisers, including Larry Kudlow and Stephen Moore, have urged him to back off tariffs, which he plans to crank up Wednesday to the highest levels since the Great Depression.

Washington Post columnist Heather Long warned the move could tip the economy into a scary place.

"There is growing fear of not just a recession but stagflation, a frightful situation — not seen in the United States since the 1970s — in which the economy contracts and people lose jobs but prices remain high," Long wrote. "This is a self-inflicted wound from Trump."

Consumer sentiment is down 30 percent since Trump won the election, and surveys show many Americans are suddenly worried about unemployment and prices rising at the same time, which Long called a stagflation environment.

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"Normally, prices fall during recessions as demand dries up and retailers cut prices to try to lure people back," Long wrote. "But Trump’s intention to put tariffs of almost all imports is spooking consumers and businesses. Americans now predict inflation will jump to 5 percent in a year, according to the survey."

Americans have been unhappy with the economy for years, but Long thinks there are deeper and more worrisome facets of the latest gloomy data.

"When Joe Biden was president, people would tell pollsters and surveys that they didn’t think the overall economy was doing well," she wrote. "They were frustrated by the highest inflation in four decades. But when asked about their personal finances, most people said they were doing pretty well. This became known as a 'vibe-cession.'"

People continued spending during Biden's presidency even though they gave both him and the economy bad grades, likely due to strong job growth, a supercharged stock market and leftover savings from the pandemic, but a recent University of Michigan survey showed a bleak personal finance outlook.

"The drop is happening across all income groups," Long wrote. "Under Trump, even the rich are worried they will be worse off in a year."

That's the sort of situation that causes consumers to pull back spending, and the columnist Trump has made things worse by threatening widespread tariffs that could amount to the biggest tax hike in years.

"The U.S. economy is propelled largely by the spending and splurges of the rich and upper middle class, and now even those consumers are showing signs of cracking," Long wrote. Many middle-class and lower-income families were already exhibiting strain with record high credit card debt and the growing use of buy now, pay later shopping."

The Federal Reserve shares those concerns about slower growth, higher unemployment and higher prices.

"The Fed didn’t call it stagflation, but the early signs are there," Long wrote. "Bank of America is more explicit. Its economist now say 'modest stagflation' is the likely path for the U.S. economy in 2025. ... While this modest stagflation won’t likely be as severe as that seen in the 1970s, it would still be painful and difficult to stop. Trump is counting on an economic revival from tax cuts later this year, but Goldman Sachs says that is unlikely to be enough to offset the tariff blow."

"Americans hated high prices under Biden," she added. "It could get a lot worse if there’s stagflation under Trump."