Stagflattion requires inflation + high unemployment
Itâs a strange combination. I guess it could happen again. But we had crazty-high gas prices the summer before the collapse in 2008, but no real staglfation. A barrel of oil went from about $133 to $39.
If we fall into a serious recession, unemployment numbers go up, and (incongruously) inflation stays really high, then that will be stagflation.
And you know this how?
Guessing based on political ideology?
Or did you actually look it?
General rule:
If you are making something up
you should not purport it to be fact.
Anyway, natural gas is expensive to store and ever since the the Freeport fire June 8 the US has not had much capacity to export LNG. Iâd have to figure Nat Gas storage facilities maxed out almost immediately. Why do I figure that? Well this is America and we donât build new energy facilities (pipelines, oil refineries etcâŚ)
I donât know if the cause is NIMBYism, eco-lunacy or the Koch Bros trying to preserve a monopoly, but we donât build energy infrastructure here no matter how badly the fee market wants to.
I could see a case that (prolonged) stagflation might be on the horizon. Economies pretty much always enter a brief period of stagflation as boom turns to bust. (That just means if you microanalyze the cycle, unemployment tends to rise before inflation comes down far enough to make people comfortable.)
The last time the US had a prolonged period of stagflation
it came when the Fed had used a prolonged series of timid anti-inflationary measures. Right now the Fed is promising âa different kind ofâ prolonged series of timid anti-inflatioary measures.
There are not a lot of historic examples, but the most obvious one we have says âwe might get the same result this time.â
The Fed is very very very unlikely to break the back of 8.3% inflation with a 4-and-change interest rate. It has never been done. It is an untested (goofy) theory best viewed and a half-measure and an excuse from Keynesian economists to admit how high the rates really do need to go.
So,
the Fed will not break the back of inflation unless it changes policy.
More likely, either traditional inflation will continue or stagflation will develop.
its going to get worse before it gets better. the diesel and derivative crunch is just starting.
the cost of energy is going to drive inflation higher and its going to be basics. food and fuel. with a tight job market, wage inflation will become a driver too. all with higher interest rates depressing the housing market. people are going to find themselves underwater on mortgages again. if the mortgage bubble bursts, weâre â â â â â â â
i am talking the recently concluded 3q (july, august and september)
you know the economy grew during that period right and will most likely 2022 the economy in the united states will end up growing.
it hard to have a major recession with full employment and raising wages.