BREAKING: Federal Reserve Chair Jerome Powell drops an atom bomb on MAGA world by announcing that Donald Trump’s tariffs could endanger employment while simultaneously skyrocketing inflation.

This is an economic doomsday scenario…

“The level of the tariff increases announced so far is significantly larger than anticipated,” Powell said at an event hosted by the Economic Club of Chicago. “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension.”

The Fed is tasked with promoting full employment while keeping inflation at a reasonable level but Trump’s catastrophic tariffs endanger both mandates.

The tariffs are spiking inflation because the increased costs are passed on to consumers and employment is endangered because companies are choosing to lay off workers to make up for their lost profits.

“A tariff is like a negative supply shock. That’s a stagflationary shock, which is to say it makes both sides of the Fed’s dual mandate worse at the same time,” Chicago Fed President Austan Goolsbee said last week.

“Prices are going up while jobs are being lost and growth is coming down, and there is not a generic playbook for how the central bank should respond to a stagflationary shock,” he added.

For now, Powell said that the Fed’s best plan of action is to wait and see until they get a fuller understanding of the wide-ranging impacts of Trump’s tariffs.

He stated that if we hit stagflation — high unemployment and double-digit inflation — then “we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

“We understand that elevated levels of unemployment or inflation can be damaging and painful for communities, families, and businesses,” he added.

If Trump puts his “reciprocal” tariffs back in place after the 90-day pause elapses, there is no telling how widespread the economic damage will be.