"BlackRock Forecasts Economic Flatline and Generational Shift to Full-Employment Stagnation"

BlackRock expects the U.S. economy to remain stagnant for another year as the full impact of high interest rates and consumer exhaustion of pandemic savings takes hold. This prolonged period of economic flatlining could lead to a generational shift towards "full-employment stagnation" due to changing demographics and a rise in early retirements, resulting in labor force shortages and potential inflationary pressures. BlackRock warns that the Federal Reserve will face challenges in sustaining economic growth while keeping inflation in check, as traditional tactics may prove more inflationary amid future labor shortages. Monetary policy alone cannot rescue the economy from weakness, and the Fed must ensure that the economy does not grow faster than it can sustain without surging inflation.