We are seeing more of an economy of ‘stagflation’

We are seeing more of an economy of ‘stagflation’

AT&T CEO (T) John Stankey takes a cautious stance on the near-term outlook for an economy that continues to struggle with high levels of inflation and a surge in layoffs.

“It’s hard to say,” Stankey told Yahoo Finance Live at the Goldman Sachs Communacopia + Technology Conference, when asked if the US economy is feeling a recession.

“I would tell you right now, when you see the inflation numbers coming in, it’s hard to believe that at some point it won’t have an impact. And even if we miss a full-blown recession, the question is, ‘Is growth strong? enough to really push out high inflation?’ And we’re seeing more of an environment of stagflation. But I think we’re going to have to go into the fourth quarter, the first quarter of next year, to really see what the outcome of that game is,” he said.

Stankey isn’t alone in offering a more sobering look at the economy as the calendar looks to October — and more growth-disrupting Federal Reserve rate hikes.

Goldman Sachs chief economist Jan Hatzius lowered his 2023 GDP forecast to 1.1% this week. Previously, Hatzius was looking for 1.5% growth.

Hatzius says he sees the outlook for growth and jobs next year “slightly worse” as the Fed tightens financial conditions to offset inflation.

The economist’s closely watched GDP cut follows closely on from Fedex and Ford’s financial warnings, both of which blamed the mixed economic conditions.

As for AT&T, recent trends in its business underscore the economic pressures that are weighing on households.

On July 21, the telecom giant’s share fell 7% after the company announced in its second-quarter results that customers paid their bills about two days later compared to the previous year’s trends. That, in turn, caused AT&T to lower its free cash flow guidelines for the full year by $2 billion.

“We haven’t seen any changes in the trend,” Stankey told Yahoo Finance Live. “It hasn’t deteriorated further, and frankly we wouldn’t expect it to.”

Brian Sozzi is a great editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and further LinkedIn.

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