We throw this term around far too casually. We’re nowhere near such a phenomenon.

By definition it’s a combination of slowed growth, high unemployment and high inflation.

I’ll admit that growth feels slower despite some numbers being released. Unemployment is still at historic lows. And while our lens to the world tends to be the here and now; from a historical context inflation is not anywhere close to periods of stagflation. The 70’s era UK period that coined the term had years of 25% inflation and interest rates in excess of 15%.

I think many of us have lost sight of the fact that we’ve spent most of our adult lives where interest rates were at unprecedented low levels. Literally free money it seemed.

While the prospect of paying 7-8% on a home loan seems blasphemous to many. Odds are your parents happily refinanced to get that rate 30 years ago.

Not my intent to be argumentative; just find that term is often thrown about in the most sensationalist context.

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Posted by Bard

Definitely NOT an admin

Member since Oct 2008

51855 posts

Posted on 5/3/24 at 9:52 am to wiltznucs

quote:
We throw this term around far too casually. We’re nowhere near such a phenomenon.

We're closer than you think.

Inflation is not only high, but has been rising (despite sustained rate hikes), growth slowed tremendously in Q1 and Unemployment is starting to tick up.

Unemployment isn't really considered "high" until it gets above 5% (the annual average for the last ~century is about 5%, if memory serves), so we still have a ways to go there.

Job creation finally dropped and Unemployment has moved up, likely we can assume economic activity is slowing.

All in all, we're likely about halfway into a "stagflation" scenario and trending points toward that movement toward stagflation to continue.

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Posted by VolSquatch

First Coast

Member since Sep 2023

2246 posts

Posted on 5/3/24 at 9:59 am to wiltznucs

quote:
While the prospect of paying 7-8% on a home loan seems blasphemous to many. Odds are your parents happily refinanced to get that rate 30 years ago.

The problem is that because mortgages were 2-3% for so long, prices inflated to the point that 7-8% for the average house now is a much higher % of your income than double that in the 70's and 80's.

There is just too much investment in housing for there to ever be a significant dip in home prices as well. Its most people's largest single investment... housing and other real estate is in everyone's 401k...

The rates not being high historically =/= that they aren't high considering the current economic climate.

But you're right on your main point about stagflation... we have a lot of doomers here.

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