BlackRock predicts rollercoaster inflation and stagnant economy as labor market shifts

BlackRock predicts that the US economy will remain stagnant for another year as the full impact of high interest rates and consumer exhaustion of pandemic savings takes effect. This prolonged period of economic stagnation would be the weakest since the Global Financial Crisis. BlackRock also warns of a "full-employment stagnation" in the long term, as changing demographics and a rise in early retirements lead to labor force shortages, potentially reigniting inflation. The US workforce is currently 4 million workers short of pre-COVID levels, and due to demographics, it is expected to grow at a slower rate, causing weak growth and rising inflation. BlackRock advises the Federal Reserve to ensure that the economy does not grow faster than it can sustain without surging inflation, as traditional tactics to stimulate growth may be more inflationary in the face of future labor shortages.