3 years hence is just when it becomes undeniable.
In economics, the derivative (rate of change) matters a lot.
EX:
The 1980s were an economic boom yet in the first half, mortgage rates were over 15% and for the second half rates were 10-15%. Why wasn’t that Armageddon? Because throughout the 1970s rates had been 7.5-10%. What mattered was not the 10-20% rate, what mattered was that rates (only) doubled.)
The economy is already sick. The symptoms, the pain, are already here. The dearth of full-time employment, wages of the lower half not keeping pace with inflation, car repossessions way up. Entire sectors of retail are selling 20% less than they did just 3 years ago. The lower half cannot buy houses etc. etc..
Saying “I’m not sick because the coma part of my illness has not hit yet” is not the same as being healthy.
And the milestone was reached very quickly.
The US deficit rises during recessions. (Tax revenue go down, social welfare payments go up.)
But in the past, deficits go down when we are not in recession.
Except for WW2, no congress, no president, has ever been so irresponsible as to take on a big deficit unless we needed it for a recession.
Stagflation is one of the biggest risks staring down the Fed in 2026, Apollo’s Torsten Sløk says.
The scenario, often thought to be the worst-case for the economy, entails slow growth and elevated inflation.
That risk is one of the biggest obstacles to the Fed cutting rates next year, in Sløk’s view.
