The fundamentals of the U.S. economy are in good shape, with low unemployment and robust growth in recent quarters.

But warning signs have been flashing and markets have been sliding amid policy uncertainties and some troubling macroeconomic indicators.

Here’s a look at the risk factors currently facing the U.S. economy.

Inflation risks

After rising to a 9-percent annual increase in the aftermath of the pandemic, inflation sank nearly all the way back down to the Federal Reserve’s target rate of 2 percent by the middle of last year.

However, it started to rise again through the fourth quarter and the consumer price index (CPI) was back up at a 3-percent increase in January, prompting President Trump to declare that “inflation is back.”

February CPI released Wednesday broke this trend, dipping back down to a 2.8 percent rise, leading many economists to breathe a sigh of relief. The personal consumption expenditures (PCE) price index also fell back in its latest reading, easing from a 2.6 percent rise in December to 2.5 percent in January.

“Today’s more benign CPI reading is welcome news but largely a function of lagging inflation components and volatile prices,” Skanda Amarnath, director of Employ America, a think tank and advocacy organization, said in a commentary.

Price increases are still a top concern for consumers in public opinion polls.

“Although inflation has eased considerably from its highs in mid-2022, prices remain consumers' top concern,” analysts for Morning Consult concluded in a Wednesday report.

The University of Michigan consumer sentiment survey showed inflation expectations for the year ahead rise considerably from January to February, jumping a full percentage point to 4.3 percent — more........

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