Pulais: The inflation rate in the U.S. may exceed 4% in the coming quarters, but the economic outlook remains cautiously optimistic

According to the Zhitong Finance APP, Blerina Uruci, Chief U.S. Economist at Pruis, stated that the overall inflation rate in the United States is on the rise and may exceed 4% in the coming quarters. With the increase in effective tax rates, costs are expected to be passed on to consumers. Pruis noted that despite facing inflationary pressures and potential technical recession, the overall economic outlook remains cautiously optimistic. The labor market is often seen as an indicator of economic health and is currently holding steady.

However, Blerina Uruci mentioned that some warning signs have emerged, such as an increase in layoffs in the federal and service sectors, as well as a decrease in the ratio of voluntary resignations to layoffs, reflecting a more cautious attitude among employed individuals. Confidence among small businesses is also weakening, adding concerns to what was previously a stable job market.

In terms of fiscal measures, Pruis indicated that a new economic stimulus plan is expected to be announced before Congress adjourns in August, bringing short-term benefits to the market. This plan may include tax relief for middle-income families and incentives aimed at encouraging business investment, which is expected to timely boost consumer and business confidence.

On the monetary policy front, the Federal Reserve continues to focus on controlling inflation. Interest rates are maintained in the range of 4.25-4.5%, with the Federal Reserve clearly signaling a patient, data-driven decision-making approach. Although the market generally expects the Federal Reserve to continue cutting rates, Fed officials are more inclined to prioritize the long-term stability of the economy and will not act lightly until inflationary pressures are consistently and significantly alleviated.

Pruis stated that for a long time, strong consumer demand, an active labor market, and supportive fiscal policies have allowed the U.S. economy to stand out in growth, but related markets are reassessing the associated premiums. As the growth gap with other economies begins to narrow, the status of the dollar is once again under scrutiny. The unclear inflation outlook and fiscal sustainability have led to rising term premiums, and the yields on government bonds continue to climb.

Looking ahead to 2026, Pruis indicated that fiscal support is expected to strengthen, the labor market is likely to stabilize, and economic conditions will gradually normalize, which is expected to allow the economy to regain growth. However, risks remain, including the impact of tariffs on inflation, potential deterioration in the labor market, global supply chain disruptions, and fluctuating trade relations, which investors need to closely monitor