The Fed Isn’t Calling It ‘Stagflation,’ but the Risks Are Rising

The most important word at the Federal Reserve’s meeting on Wednesday may have been the one that its chair, Jerome H. Powell, never uttered publicly: stagflation.

Economic projections released by Fed officials in conjunction with their meeting showed growth slowing sharply this year, unemployment rising and inflation picking back up. That is a painful mix for the public, and a challenging one for central bankers.

The concept of stagflation, at least in the public consciousness, dates back to the 1970s, when the United States and other countries experienced a period of anemic growth and rapidly rising prices: stagnation combined with inflation.

The United States isn’t experiencing stagflation right now. Unemployment is still low, and economic growth has mostly been solid. (Gross domestic product declined in the first quarter, but for complicated reasons that masked underlying strength.) Inflation has continued to cool.

But President Trump’s tariffs, combined with broader uncertainty about his trade and economic policies, are likely to lead to faster inflation and slower growth in the months ahead, according to most forecasters. In their projections on Wednesday, Fed officials said they expected G.D.P. to grow at just a 1.4 percent rate this year, down from the 1.7 percent rate they predicted in March. They expect consumer prices to rise 3 percent this year, significantly above their March forecast of 2.7 percent. And they expect unemployment to rise to 4.5 percent, up from the 4.4 percent in their prior forecast.

That probably wouldn’t qualify as full-blown stagflation according to most economists. (There is no formal definition.) But such a situation would certainly be “stagflationary,” reflecting slower growth and faster inflation than would be the case if Mr. Trump’s trade war had never taken place. Joseph Brusuelas, chief economist for the accounting firm RSM, has described the scenario as “stagflation lite.”