Stagflation is the combination of slow growth and rising inflation and trade wars are a “stagflation shock,” according to Apollo Global Management. In a new research note coauthored by chief economist Torsten Slok, the firm predicts a sequence of events that could lead to economic catastrophe.

The recent array of tariffs the Trump administration has announced have the potential to trigger a recession by summer 2025, according to a new report from Apollo Global Management.

Based on Apollo’s potential sequence of events, shipping containers from China to the U.S. slowed down after President Trump’s Liberation Day tariff address this month. Allowing for 20-to-40 days travel time, containers shipped to U.S. ports could halt in May. By mid-May, that would portend a rapid slowdown in demand for trucking, which would be followed by less stock in stores for people to purchase. With those signs, that would mean sluggish sales in spring, while subsequent layoffs in retail and trucking could come by late May and early June. Then, in summer 2025, a full recession could take root.

The Apollo report, co-authored by chief economist Torsten Slok, associate director Rajvi Shah, and associate Shruti Galwankar, paints a bleak economic outlook and is essentially a warning that the U.S. economy is rapidly on pace for a recession due to trade disruptions.

Warning signs have already appeared even though Trump’s tariff plan was only announced weeks ago. The Apollo report specifically identifies trade wars as a source of stagflation shock because they cause economic activity to lag due to disruptions in supply chain and lower trade volumes. At the same time, the trade standoffs typically raise prices on the cost of imported goods while reducing competition. The dreaded stagflation results from a combination of slower or stagnating growth and increased inflation. There hasn’t been a sustained period of major stagflation in four decades.

The Apollo research note warns important business sentiment indicators are dropping in short order and the way consumers are responding is cause for serious concern.

Waning CEO Confidence

Chief Executive’s most recent survey of CEO confidence shows declining optimism, with 62% of top execs now predicting a slowdown or recession in six months.

CEOs surveyed who predicted a severe recession rose from 9% in March to 14% in April, Chief Executive’s monthly survey found. Furthermore, some 84% of CEOs reported anticipated revenue growth at the start of the year, while only 49% predicted that revenues would grow in 2025 when CEOs were queried again in April.

Only 9% of CEOs expected a revenue decrease at the start of the year, compared to 44% in the April survey.

A steep falloff in CEO optimism is coupled with a similar decline in a positive outlook among consumers.

Plummeting Consumer Sentiment

In a new chart on Sunday, Slok, Apollo’s chief economist, noted that a new record high share of households are only making minimum payments on credit card balances.

The Federal Reserve Bank of Philadelphia revealed that credit card balances are showing signs of “consumer distress.” The percent of accounts making minimum payments hit a 12-year high based on the Fed’s data, while delinquency metrics were close to or set new highs.

At the same time, people are increasingly worried they will lose their jobs, the Apollo report shows.

The University of Michigan’s Institute for Social Research’s Survey of Consumers saw its Consumer Sentiment Index drop to 52.1 in April, down from 57 in March. About two thirds of consumers think unemployment will rise this year, which is twice as many as six months ago, according to institute director and economist Joanne Hsu, who was quoted in an update.

“In an alarming development, consumers are increasingly worried that their income prospects may be worsening as well,” she continued.

Less than 50% think their own income will increase this year, and about two thirds believe their purchasing power will be whittled down in the coming months, the Michigan survey revealed.

CEOs are in distress and consumers fear job losses amid ‘stagflation shock,’ economist warns