If you just look at the U3 unemployment figures, you would not think stagflation is on the table.
But if you look at the broader U5 and U6 data, it's a real possibility.
Based on the rise of people 16-64 not in the labor force, and the declining employment population ratio, one could even argue that stagflation is here.
I tend to view stagflation as a confluence of inflationary and deflationary forces. As such, any scenario where there is pronounced deflation in some sectors and inflation in other sectors is arguably a stagflation scenario.
The goods deflation and services inflation arguably fits that description, which again means we're dealing with stagflation.
The hard part is figuring out what the future holds for energy prices. There have been signs that energy price deflation is coming to an end, and then oil prices punch through resistance levels.
Part of me wants to agree with you on energy prices.
However, I've been anticipating higher energy prices every month since the summer and the markets have proved me wrong pretty much every time.
I will say that both OPEC and IEA are forecasting less demand going forward than they have previously, and the anticipation of reduced demand does appear to be exerting significant downward pressure on prices.
So long as that holds true, and especially if the US can maintain energy independence, then oil prices could go a bit further down yet.
Certainly goods prices have been broadly in decline in the US for most of the year, although import prices have been generally on the increase.
While the US could be heading into a "lost decade" scenario vis-a-vis Japan in the late 90s, the economic stars are not at present lining up for a repeat of the 1970s hyperinflation/stagflation scenario. That could happen, but I don't think the precursors for that sort of event have appeared at this time.
Stagflation on the way?
Possibly.
If you just look at the U3 unemployment figures, you would not think stagflation is on the table.
But if you look at the broader U5 and U6 data, it's a real possibility.
Based on the rise of people 16-64 not in the labor force, and the declining employment population ratio, one could even argue that stagflation is here.
I tend to view stagflation as a confluence of inflationary and deflationary forces. As such, any scenario where there is pronounced deflation in some sectors and inflation in other sectors is arguably a stagflation scenario.
The goods deflation and services inflation arguably fits that description, which again means we're dealing with stagflation.
The hard part is figuring out what the future holds for energy prices. There have been signs that energy price deflation is coming to an end, and then oil prices punch through resistance levels.
With the last 4 years of underinvestment/ disinvestment and emptying the reserve by 50%
Energy prices should not see any further SUSTAINABLE lower prices.
Economy in general is in for a severe down turn which may cap any serious increases until they start printing again.
Everything one needs to live will see major increases while the opposite is true os discretionary spending collapses. Late 1970s on steroids.
Part of me wants to agree with you on energy prices.
However, I've been anticipating higher energy prices every month since the summer and the markets have proved me wrong pretty much every time.
I will say that both OPEC and IEA are forecasting less demand going forward than they have previously, and the anticipation of reduced demand does appear to be exerting significant downward pressure on prices.
So long as that holds true, and especially if the US can maintain energy independence, then oil prices could go a bit further down yet.
Certainly goods prices have been broadly in decline in the US for most of the year, although import prices have been generally on the increase.
While the US could be heading into a "lost decade" scenario vis-a-vis Japan in the late 90s, the economic stars are not at present lining up for a repeat of the 1970s hyperinflation/stagflation scenario. That could happen, but I don't think the precursors for that sort of event have appeared at this time.