BlackRock CEO Larry Fink says the US market will see more inflation over the next 6 to 9 months

Larry Fink, CEO of BlackRock, warned Monday that inflation in the United States is going to keep climbing, and the next six to nine months will bring even higher costs.

Speaking at the CERAWeek conference in Houston, he blamed rising inflation on nationalistic policies, including the deportation of workers, and said markets aren’t fully pricing in what’s coming.

“I think if we all are becoming a little more nationalistic – and I’m not saying that’s a bad thing, you know, it does resonate with me – that it’s going to have elevated inflation,” Larry said. He pointed to mass deportations as a serious risk, especially for industries that depend on immigrant labor.

Labor shortages and tariffs could drive costs higher

Larry said the agriculture sector could struggle if large numbers of workers are deported, raising concerns about whether the country will have enough people to handle the workload. “Are we going to have enough workers to harvest this now?” he asked.

It’s not just farming. Larry told members of Donald Trump’s team that the U.S. doesn’t have enough electricians to build the AI data centers needed for tech expansion. “We just don’t have enough,” he said, emphasizing that labor shortages will impact multiple industries.

Beyond immigration, Larry also addressed the tariff policies being pushed by Trump’s administration. The government has been threatening to slap hefty tariffs on major trade partners, which industry leaders say will lead to higher import costs.

“When I go to Washington, when they talk about these policies, at what cost are you willing to tolerate that?” he said, raising concerns about how much Americans are willing to pay for these economic decisions.

Markets react as investors brace for uncertainty

The stock market didn’t take the warnings lightly. On Tuesday morning, S&P 500 futures ticked up slightly after a sell-off on Monday that wiped out gains across the board.

Futures tied to the Dow Jones Industrial Average reversed earlier losses, climbing 0.3% (126 points), while Nasdaq 100 futures saw a small 0.14% increase. However, Nasdaq-100 futures stayed negative, dropping 0.15%.

Some companies took a big hit. Delta Air Lines saw its stock tumble 11% after cutting its profit and sales forecast for the current quarter. The airline blamed weaker demand for U.S. travel, making it clear that rising costs and economic uncertainty are affecting consumer behavior.

The broader market saw heavy losses on Monday, with the S&P 500 marking its third straight week of declines. The Nasdaq Composite had its worst day since September 2022, and the Dow sank nearly 900 points, closing below its 200-day moving average for the first time since November 1, 2023.

Fears of a recession are creeping back into Wall Street. Trump, when asked about the economy during a Fox News interview on Sunday, described it as going through a “period of transition.”

Meanwhile, Treasury Secretary Scott Bessent told CNBC on Friday that the economy could face a “detox period” as the administration cuts federal spending.

Adding to the uncertainty, Goldman Sachs lowered its economic growth forecast, citing concerns over Trump’s tariff policy. The bank didn’t give an exact number, but analysts made it clear that higher trade barriers could slow down the economy.

Investors focus on economic reports as Treasury yields slide

This week’s economic reports could give investors a clearer picture of what’s ahead. Job openings data comes out Tuesday, followed by February’s consumer price index (CPI) on Wednesday morning and the producer price index (PPI) on Thursday.

In the bond market, U.S. Treasury yields kept falling on Tuesday as investors moved toward safe havens. The benchmark 10-year Treasury yield dropped 5 basis points, hitting 4.162% before rebounding slightly to 4.1865%. The 2-year Treasury yield slid to 3.829% before settling at 3.875%.

Some of the biggest job losses in recent weeks came from Elon Musk’s Department of Government Efficiency (DOGE), which slashed thousands of jobs. But according to Barclays, this won’t change Federal Reserve policy. “In our view, the bar is high for DOGE-related job losses, in isolation, to alter the FOMC’s policy course in the next few meetings,” the bank said in a report.

Barclays analysts argued that the workers laid off by Musk’s department have a wide range of skills and are scattered across the country. That means many of them will likely be absorbed into other sectors, minimizing any immediate economic impact.

Tariff fatigue and market volatility continue

Market instability isn’t going away anytime soon, according to Wolfe Research. In a note to clients, the firm warned that investors are dealing with “tariff fatigue”, as Trump’s policy shifts create confusion and market whiplash.

“Investors are likely feeling ‘tariff fatigue’ as flip-flopping of policy and a barrage of news flow throughout last week has whipsawed markets,” wrote Chris Senyek, Wolfe’s chief investment strategist. He predicted that policy changes will continue but that volatility will remain the dominant trend.

There’s still some optimism about the U.S. economy. Senyek pointed out that despite rising inflation and market downturns, the country’s wealthiest consumers are keeping spending levels high. “We continue to believe that the U.S. economy is still solid, on the back of the high-end consumer, which drives roughly 50% of overall spending,” he wrote.

While stocks are down, Senyek described the market’s movement as a “typical drawdown”, with the Nasdaq 100 and S&P 500 down 10% and 7% from their highs. Technical indicators, he said, are signaling fear, but not a full-blown collapse.

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