Building up inventory is easy, but demand drops are hard; with cost inflation rising again, the stagflation scenario looms faintly on the horizon.

Williamson states that U.S. manufacturing has expanded and accumulated inventories due to war-related supply and price concerns; the service sector's demand has been essentially stagnant for nearly three months, dragging down growth. PMI indicates that the growth rate in the second quarter is slightly higher by 1%. Consumers are squeezed by energy prices, with orders in related industries falling to the lowest levels since the pandemic, and finance and corporate services are also impacted by high interest rates. Cost-side inflation is rising, which may temporarily push up prices, but weak demand and cooling employment may ease concerns.