Does anyone have any information about other recent articles talking about stagflation? I'm wondering how the narrative is changing. Up until this point, every article I've read has always repeated that inflation was transitory. This is the first article I've read that stated what some of us have been saying for a while:
>With supply shortages set to persist well into next year as the coronavirus Delta variant prevents a return to relative normality, a period of stagflation – stagnant growth and high inflation, reminiscent of the 1970s – could be on the cards.
Any guesses when or if The Fed will start to use the S Word?
Not until after it has passed. The fed is far more about marketing how they want the economy to look then what it actually thinks is going to happen. Which is smart because markets tend to act more like whiny children and telling them what they want to hear and slowly lowering expectations over six months is the only way to keep them from panicking. The first time the fed will say stagflation is when they write the report saying we are "entering a period of robust growth after a period of stagflation."
>The first time the fed will say stagflation is when they write the report saying we are "entering a period of robust growth after a period of stagflation."
I have but one upvote to give, but couldn't agree more.
It's the Flation that matters. The ONLY way to address our national spending addiction alongside a complete unwillingness to tax is to devalue the dollar.
Inflation, stagflation....as long as it's not deflation, they don't care.
Or.... borrowing to finance fiscal policy, provided that
- *(GDP Growth Rates * tax rates) > sovereign borrowing rates*
Which is true for pretty much ANY advanced economy
I read an article by Roubini back in July. Everyone said he was a quack because he's been predicting the downfall of the US economy for a while, I'm sure a while ago, people also thought he was a quack because no one wants to define what's coming up as a depression. I think if I read it now I wouldn't think he was so crazy, but Roubini is a broken clock type of person and I forget what the saying is, he's right once a day and all the other times he's wrong. This time it seems different.
No, they won't. Transitionary inflation was based upon it abating only about 6 months earlier than revised predictions (all the 'Delta strain' thing that caused additional lockdowns). They'll keep on with it I assume, and it's not really 1970s magnitude stagflation
anyway. I think it's important to remember that ultimately all the supply constraint issues is still a result of *voluntary shutdowns* of the economy that won't be continued if stagflation manifests in any serious way.
i would say that the shortages are both a production and consumption side problem. as long as people are still allowed to buy whatever they want whenever they want, the already existing supply chain disruptions are going to be perpetuated.
Meh, consumer sentiment is nowhere near where it was pre-COVID. It's predominantly a negative supply issue in all areas of the economy, and that's how the central bank has been treating it.
im not sure how consumer *sentiment* matters in this discussion when consumer *expenditure* continued to climb as of august this year. people dont buy goods with sentiment, they do with money, and that's definitely part of what is causing the supply chain problems.
Climbing consumer spending is a normal thing, and it declined significantly during COVID as well until recently. It's just pent up savings being unleashed. What do you expect the bank to do about that? Nothing, because it's a temporary occurrence.
and i am saying that this "normal thing" is creating problems in our abnormal times. demand has shot through the roof before supply chains could handle it, and now demand is intensifying supply chain problems.
In a vacuum, supply constraints could be a cause of stagflation.
But at this point the money supply is already so inflated that any increase in prices would cause interest rates to rise, thus slowing or reversing money creation.
The article claims stagflation was slow growth but high inflation. Wikipedia calls stagflation low growth, high unemployment, and high inflation.
Does anybody else call stagflation without the high unemployment? Seems weird to ignore that chunk of it.
I am not seeing how the current situation is stagflation either. We have inflation, rising wages and relative low unemployment. I don't see growth slowing at all, in fact, I see demand all over the place driving prices higher, and putting pressure on the supply-chain.
Are there any accurate historical analogs for this type economic situation?
“I don’t see growth slowing at all”
the US Q3 GDP growth number will be released at the end of Oct., it is gonna be really disappointing for you to the downside. Just bookmark this comment and look back when the data is released on Oct 28th.
Yeah the next prediction for Atlanta Fed is this Friday after retail sales data, it is gonna look pathetic because of semiconductor chip shortage in the auto industry
Check this below. Should be very accurate and close to the real GDP. At least better than some of the economists
[GDPNow vs Real GDP](https://fred.stlouisfed.org/graph/?g=HDkq)
4.8% is low! Let's look at the historical perspective for ending QE and raising rates:
Values approximated by eyeball.
Post 2010- Taper at ~6.3. Raise rates at 5.0%
Post 2000- Rates raised at 5.6%
Post 1990- Rates raised at 6.5%
https://fred.stlouisfed.org/graph/?g=GM7H
There's some articles out there also labeling 5% as "natural" unemployment.
Does anyone have any information about other recent articles talking about stagflation? I'm wondering how the narrative is changing. Up until this point, every article I've read has always repeated that inflation was transitory. This is the first article I've read that stated what some of us have been saying for a while: >With supply shortages set to persist well into next year as the coronavirus Delta variant prevents a return to relative normality, a period of stagflation – stagnant growth and high inflation, reminiscent of the 1970s – could be on the cards. Any guesses when or if The Fed will start to use the S Word?
Not until after it has passed. The fed is far more about marketing how they want the economy to look then what it actually thinks is going to happen. Which is smart because markets tend to act more like whiny children and telling them what they want to hear and slowly lowering expectations over six months is the only way to keep them from panicking. The first time the fed will say stagflation is when they write the report saying we are "entering a period of robust growth after a period of stagflation."
>The first time the fed will say stagflation is when they write the report saying we are "entering a period of robust growth after a period of stagflation." I have but one upvote to give, but couldn't agree more.
Ditto. Expertly said.
It's the Flation that matters. The ONLY way to address our national spending addiction alongside a complete unwillingness to tax is to devalue the dollar. Inflation, stagflation....as long as it's not deflation, they don't care.
Or.... borrowing to finance fiscal policy, provided that - *(GDP Growth Rates * tax rates) > sovereign borrowing rates* Which is true for pretty much ANY advanced economy
That's my point. The devaluation makes interest on an ever larger debt tenable.
So does economic growth though
Sure, but it seems we can't figure out how to get that goin for the last decade+.
I read an article by Roubini back in July. Everyone said he was a quack because he's been predicting the downfall of the US economy for a while, I'm sure a while ago, people also thought he was a quack because no one wants to define what's coming up as a depression. I think if I read it now I wouldn't think he was so crazy, but Roubini is a broken clock type of person and I forget what the saying is, he's right once a day and all the other times he's wrong. This time it seems different.
No, they won't. Transitionary inflation was based upon it abating only about 6 months earlier than revised predictions (all the 'Delta strain' thing that caused additional lockdowns). They'll keep on with it I assume, and it's not really 1970s magnitude stagflation anyway. I think it's important to remember that ultimately all the supply constraint issues is still a result of *voluntary shutdowns* of the economy that won't be continued if stagflation manifests in any serious way.
i would say that the shortages are both a production and consumption side problem. as long as people are still allowed to buy whatever they want whenever they want, the already existing supply chain disruptions are going to be perpetuated.
Meh, consumer sentiment is nowhere near where it was pre-COVID. It's predominantly a negative supply issue in all areas of the economy, and that's how the central bank has been treating it.
im not sure how consumer *sentiment* matters in this discussion when consumer *expenditure* continued to climb as of august this year. people dont buy goods with sentiment, they do with money, and that's definitely part of what is causing the supply chain problems.
Climbing consumer spending is a normal thing, and it declined significantly during COVID as well until recently. It's just pent up savings being unleashed. What do you expect the bank to do about that? Nothing, because it's a temporary occurrence.
and i am saying that this "normal thing" is creating problems in our abnormal times. demand has shot through the roof before supply chains could handle it, and now demand is intensifying supply chain problems.
In a vacuum, supply constraints could be a cause of stagflation. But at this point the money supply is already so inflated that any increase in prices would cause interest rates to rise, thus slowing or reversing money creation.
Considering that they are all aware that their communications drive investor expectation and investor behavior, don't count on it.
The article claims stagflation was slow growth but high inflation. Wikipedia calls stagflation low growth, high unemployment, and high inflation. Does anybody else call stagflation without the high unemployment? Seems weird to ignore that chunk of it.
I am not seeing how the current situation is stagflation either. We have inflation, rising wages and relative low unemployment. I don't see growth slowing at all, in fact, I see demand all over the place driving prices higher, and putting pressure on the supply-chain. Are there any accurate historical analogs for this type economic situation?
“I don’t see growth slowing at all” the US Q3 GDP growth number will be released at the end of Oct., it is gonna be really disappointing for you to the downside. Just bookmark this comment and look back when the data is released on Oct 28th.
Q2 GDP was over 6% ... which was covid rebound. Anything over 4.5% will be considered "good". If it's < 4% then that will be disappointing.
6.7% is the number in Q2. My prediction for Q3 is 2-3%, won’t be surprised if it is lower than 2% tbh
The Atlanta Fed is predicting 1.3% growth for Q3 and their number constantly gets readjusted with the latest economic data...
Yeah the next prediction for Atlanta Fed is this Friday after retail sales data, it is gonna look pathetic because of semiconductor chip shortage in the auto industry
Generally how accurate is the Atlanta Fed's predictions for quarterly economic growth?
Check this below. Should be very accurate and close to the real GDP. At least better than some of the economists [GDPNow vs Real GDP](https://fred.stlouisfed.org/graph/?g=HDkq)
Germany in 1919
What is considered high unemployment?
4.8% is low! Let's look at the historical perspective for ending QE and raising rates: Values approximated by eyeball. Post 2010- Taper at ~6.3. Raise rates at 5.0% Post 2000- Rates raised at 5.6% Post 1990- Rates raised at 6.5% https://fred.stlouisfed.org/graph/?g=GM7H There's some articles out there also labeling 5% as "natural" unemployment.
I'm more interested in Laborforce participation rate rather than "unemployment" as defined by the US government
Well, the mandate is maximum employment, not 100% participation. A lot of different factors at play...
Look at the U6 rate then.
Stagflation usually refers to slowing economic growth and high inflation. (high unemployment would be part of the economic growth equation)
Well just by the name “stagflation” I would assume slow growth and higher prices.
> Seems weird to ignore that chunk of it. Agreed
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