Federal Reserve Chair Jerome Powell hinted earlier this month at a growing risk of stagflation in the U.S. economy, referring to a scenario where both inflation and unemployment are elevated and growth is stagnated. So what does Morning Consult data say about stagflation? Is it here already? The answer is mixed. While there are some signs that point to the early stages of stagflation, many economic indicators continue to show robust consumer resilience, keeping the U.S. economy stable for now.

The bad news: higher prices and slower hiring

Inflation is reheating, and consumers are noticing

Since hitting a recent low of 2.3% in April, inflation has been slowly climbing back up, most recently reaching 2.9% in August year-over-year according to the Bureau of Labor Statistics’  Consumer Price Index (CPI). While this level of price growth is well below the highs from 2022, it is moving in the wrong direction, away from the Fed’s 2% target. Consumers appear to be noticing this recent acceleration of inflation, with Morning Consult’s Price Surprise Index also hitting a trough earlier this year and trending upwards ever since.

The Price Surprise Index measures the net share of consumers reporting higher-than-expected prices on their recent purchases (indexed at September 2024, when the Fed’s preferred measure of inflation was last closest to the 2% target). Higher index scores indicate more adults are noticing price increases. Excluding housing, price surprise has been steadily increasing for the past four months, suggesting that a growing share of consumers are noticing prices higher than expected rather than above/at expectations. Price surprise, like inflation, is still well below its 2022 highs, so it isn’t a cause for major concern yet. However, the upward trend could be a sign of emerging stagflation risks in combination with a cooling labor market.

Hiring has slowed, an early sign of a weakening labor market

The job market is showing signs of cooling, which Fed Chair Powell recently described as a “low-fire, low-hire economy.” Unemployment and layoffs remain low, but conditions for job-seekers have become more challenging, with the hiring rate at its lowest point in over a decade (excluding the pandemic) and job openings at multi-year lows.

Morning Consult data reflects these trends: More workers report looking for jobs, and a growing share say their job search is hindered by a lack of available positions.

The Index of Consumer Sentiment also began to diverge between job-seekers and the general population in mid- to late June, with job-seekers consistently reporting lower sentiment. While the gap has narrowed recently, this is due to a decline in sentiment among all adults rather than an increase in optimism among job-seekers. This suggests that negative views about the economy may be spreading beyond just those actively seeking work. In fact, there are some other early signals to indicate broader labor market cooling. For example, Morning Consult’s Lost Pay & Income data has been trending up in recent months.

The good news: consumer spending remains robust, buoyed by strong finances and high levels of employment

Unemployment is still at historic lows

Like the BLS’ unemployment rate, Morning Consult’s unemployment index is quite low, sustaining levels below 100 for most of 2025, indicating a relatively tight labor market. While hiring has slowed and job searches have become more difficult, the majority of Americans who want to work are employed. High unemployment is a defining feature of stagflation, and the current levels do not meet that threshold. If employers change from a low-hiring paradigm to a firing paradigm, then we could begin to see this trend reverse, with a material increase in the unemployment rate.

Consumer finances are in decent shape

Even if the U.S. workforce does begin to experience more widespread unemployment, consumers are in a relatively good position with their finances to give them at least a short-term buffer to maintain their current level of spending. 

Consumers accumulated higher-than-average savings after the pandemic, thanks to reduced spending during lockdowns and government assistance. When pandemic-era lockdowns eased, consumers began spending more freely and savings declined. However, since mid-2023, this trend has reversed, with many consumers — particularly in high- and to a lesser extent, middle-income households — adding to their savings. Since hitting a recent low in mid-2023, an increasing share of adults now report being able to cover at least three months of basic expenses without income.

While lower-earning households haven’t seen as much improvement as their higher-earning peers, their reported savings stock has remained relatively stable over the past couple of years. Overall, consumers with savings are more likely to be able to weather any potential downturns, at least temporarily, so the upward trend is promising.

Spending continues to be a bright spot for the economy

Finally, consumer spending remains the shining bright spot in the U.S. economy: Despite the headwinds, consumers continue to spend robustly. Morning Consult’s average total consumer spending level has been generally higher in 2025 than in the previous year, even after adjusting for inflation and seasonality. Spending on discretionary goods and services has been particularly strong, driven by both high- and middle-income earners. With a true stagflationary environment, it is unlikely that consumers would be spending freely on non-essentials, so we have not seen any stagflationary effects make their way into this part of the economy.

Stagflation risks are real, but for now, only early warning signs are emerging in consumer data

While there are some early warning signs, such as rising inflation and a cooling labor market, that suggest stagflation risks are increasing, the overall economic picture remains stable. Unemployment is still low, consumer finances are generally healthy and spending remains strong, especially among higher-income households. These factors continue to support economic growth and offset some of the negative trends. As a result current data from Morning Consult and official sources indicate that the U.S. economy is not yet experiencing full-fledged stagflation.