Wells Fargo Warns: Stagflation Ahead for the U.S. Economy – What It Means for the Dollar and Crypto

Wells Fargo, one of the most prominent U.S. banks, has released a new report outlining its outlook for the U.S. economy and the U.S. dollar — two topics that are closely tied to Bitcoin and the broader crypto market. The forecasts aren’t optimistic for either the U.S. or the USD. According to the bank, recent downward revisions in hiring data and a stagnating economic backdrop increasingly point toward a stagflation scenario.

Stagflation: Wells Fargo Urges Caution

Wells Fargo stresses there’s no satisfaction in being right when the projections are negative. The bank had long been skeptical about the strength of the U.S. economy, doubting its ability to overcome persistent structural issues and the new challenges brought by tariffs.

Uncertainty Dragging Down Momentum

The bank also notes that rising uncertainty is undermining economic resilience. In particular, purchasing managers appear more concerned than other market participants, which translates into a sluggish, unresponsive economy. This sentiment is confirmed by the latest ISM Manufacturing Index and the Services Index — both coming in weaker than expected.

Uncertainty is also reflected in the labor market. Employment figures for May and June were revised sharply downward — effectively to zero — and the July data is anything but encouraging.

Three Rate Cuts Expected by Year-End

Despite the bleak economic picture, Wells Fargo anticipates three interest rate cuts before the end of the year — one for each remaining FOMC meeting. This view aligns with market consensus. The Fed, according to the bank, is moving toward a neutral monetary policy stance, with further decisions dependent on 2026 data.

Such moves would serve as a stimulus — or at least a retreat from a restrictive policy environment — likely leading to further weakening of the dollar.

At the same time, risk-on assets could benefit, even though markets may have already priced in this outlook to some extent.

Implications for Bitcoin and Crypto

We’ve said it many times on these pages: stagflation is a scenario we would have gladly avoided. Yet Wells Fargo’s assessment appears credible, even if the term “moderate stagflation” remains a bit vague.

If by “moderate” they mean slow growth combined with non-zero inflation, then we agree. It’s more of a catchy media headline than something that should cause ongoing alarm.

We would likely be somewhere between a soft landing and a mild recession — a scenario that, considering current global tensions and tariffs, might be the best we can hope for.

In such a context, Bitcoin and crypto markets could weather the storm without major corrections. And if things turn out slightly better than Wells Fargo expects, the sector might even rally.

Bitcoin e crypto

Più volte abbiamo scritto proprio su queste pagine che avremmo volentieri evitato uno scenario con stagflazione. Riteniamo che la lettura di Wells Fargo sia credibile, per quanto sia difficile capire cosa intendano con moderata stagflazione.

Se con questo si intende che ci sarà una crescita rallentata e un’inflazione comunque non a zero, siamo d’accordo. Sarebbero però qualcosa di utile più per fare titoli di giornali che per preoccuparsi senza soluzione di continuità.

Saremmo al confine tra soft landing e leggera recessione, in uno scenario che comunque non è così pessimo – e che tenendo conto anche dei dazi – è forse il meglio che possiamo aspettarci.

Bitcoin e crypto potrebbero venirne fuori senza troppe preoccupazioni e senza correzioni. E se invece lo scenario dovesse rivelarsi come leggermente migliore di quello previsto da Wells Fargo…