djc
03-07-2008, 03:53 AM
Stagflation Redux
It may not seem as bad as in the 1970s. But that doesn't mean it won't be painful.
It's like a bad '70s flashback. Oil at $100 per barrel, and now stagflation.
The unhappy coincidence of sluggish growth and rising inflation, stagflation is economic poison. (Read my colleague Robert Samuelson (http://www.newsweek.com/related.aspx?subject=Robert+Samuelson)'s excellent primer (http://www.newsweek.com/id/114803) on it) It is the opposite of the economic idyll of the last quarter century, an era of relatively low inflation and relatively rapid growth.
The stag? Gross domestic product (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm) rose at an annual rate of only 0.6 percent in the fourth quarter of 2007, and likely isn't doing much better today. The flation? The Consumer Price Index (http://www.bls.gov/news.release/cpi.nr0.htm) rose 4.3 percent between January 2007 to January 2008.
The numbers seem positively buoyant compared to our last serious bout of stagflation in the late 1970s (http://economics.about.com/od/useconomichistory/a/stagflation.htm), when inflation rates spiked to double-digit levels and mortgage rates were in the high teens. Compared to the mountain of economic woe in the late Carter years, the economic woes of the late Bush years are a mole hill. But that doesn't mean those fretting about stagflation are crying wolf. Here's why.
http://www.newsweek.com/id/119767
---
It may not seem as bad as in the 1970s. But that doesn't mean it won't be painful.
It's like a bad '70s flashback. Oil at $100 per barrel, and now stagflation.
The unhappy coincidence of sluggish growth and rising inflation, stagflation is economic poison. (Read my colleague Robert Samuelson (http://www.newsweek.com/related.aspx?subject=Robert+Samuelson)'s excellent primer (http://www.newsweek.com/id/114803) on it) It is the opposite of the economic idyll of the last quarter century, an era of relatively low inflation and relatively rapid growth.
The stag? Gross domestic product (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm) rose at an annual rate of only 0.6 percent in the fourth quarter of 2007, and likely isn't doing much better today. The flation? The Consumer Price Index (http://www.bls.gov/news.release/cpi.nr0.htm) rose 4.3 percent between January 2007 to January 2008.
The numbers seem positively buoyant compared to our last serious bout of stagflation in the late 1970s (http://economics.about.com/od/useconomichistory/a/stagflation.htm), when inflation rates spiked to double-digit levels and mortgage rates were in the high teens. Compared to the mountain of economic woe in the late Carter years, the economic woes of the late Bush years are a mole hill. But that doesn't mean those fretting about stagflation are crying wolf. Here's why.
http://www.newsweek.com/id/119767
---