Is stagflatiotn upcoming?

[alani123]

I want to share some basic statistics and definitions to make this thread more accessible to anyone, even people who haven't taken Econ101.

What is stagflation?

In economics, the term stagflation is used when there is almost no growth in production, yet there is high inflation, and unemployment is high.

Source: Simle English Wikipedia.

Stagflation is surely a situation no economy would want to be in. Having inflation to keep increasing while the economy is contracting is a sign of collapse and definitely a bad look for investment. This time around we might be getting some early warning signs that the U.S. economy could be at a pivotal point that could make or break its entry into a dire macroeconomic situation.

The Data

Source: https://fred.stlouisfed.org/series/UNRATE

FED's data shows that in the U.S. unemployment isn't high, but has picked up slightly from the lows it had reached.

Meanwhile, industrial production has remained in levels lower than those of 2022's summer


In spite of the above however, the average billable hours that employees put to work has been increasing constantly


And USD inflation has been persistent above 3% after it peaked at a rate above 9% in 2021.


Do you think that the fears of a potential stagflation creeping through the economy hold any substance? For sure having inflation remain high during a phase of contraction and reduced growth is worrying, especially after it peaked that high. But the FED keeps saying "just a tiny bit more", meaning that the economy needs to contract just a little bit more before we can be done with our money being worth increasingly less due to high inflation.  Perhaps they've lost control already, but is it too early to tell? Or perhaps is inflation the new norm?

On the other hand, there's an increasing amount of people that see the hypocrisy in trying to battle inflation by increasing unemployment, all while people keep working more hours with FIAT money's purchasing power decreasing. An increasing amount of people keep considering bitcoin as a means to defend against inflation. But will it pay off if the economy officially enters into stagflation?

[1714312655]

1714312655

[1714312655]

1714312655

[komisariatku]

As far as I know, the government regulates how money circulates in society and how goods are priced in the market. This can be done because the government has control over finances with the help of the central bank. If the government feels that people's purchasing power is insufficient, the government will lower interest rates so that people can borrow money from banks and have production capacity and increase purchasing power, or the government will provide subsidies so that the price of goods does not rise. and people can still buy it.

The circulation of money in society must always be balanced, because too much money will cause demand for more goods and prices will rise, too little money will reduce purchasing power. I think a country's economy is very complicated

When a country uses bitcoin, it is likely that the government will not be able to regulate finances in society. I don't know whether it will be good or bad, because there is no more financial control.

[Upgrade00]

The U.S government have been doing a lot wrong in regards with the economy over a decade or so now and this has had a negative impact on global economies. It's w worrying situation but not one to plunge the country into stagflation anytime soon.

If the government feels that people's purchasing power is insufficient, the government will lower interest rates so that people can borrow money from banks and have production capacity and increase purchasing power, or the government will provide subsidies so that the price of goods does not rise. and people can still buy it.

Actions have consequences. Lowering interest rates can boost spending and help a stagnant economy, but it can also have negative effects if not regulated properly.
Subsidies can also have negative effects.

[komisariatku]

The U.S government have been doing a lot wrong in regards with the economy over a decade or so now and this has had a negative impact on global economies. It's w worrying situation but not one to plunge the country into stagflation anytime soon.

Yes, America is still the world's financial reference and they can manage their finances as they wish, including printing money continuously. Even though many economic observers say that the USD will collapse, in reality all countries still hold USD as foreign exchange, this makes America too tough and difficult to fight in the near future.

Moreover, if a country dares to mess with America, they can threaten and intimidate with the sophisticated weaponry and aircraft carriers they have. The economy is always connected to war and is very complicated

If the government feels that people's purchasing power is insufficient, the government will lower interest rates so that people can borrow money from banks and have production capacity and increase purchasing power, or the government will provide subsidies so that the price of goods does not rise. and people can still buy it.

Actions have consequences. Lowering interest rates can boost spending and help a stagnant economy, but it can also have negative effects if not regulated properly.
Subsidies can also have negative effects.

Yes, everything has its own negative and positive sides. However, subsidies can be used to stimulate the economy, if carried out continuously it will have a bad impact because people will depend on subsidies and the state will not be able to bear the full burden of subsidies provided continuously.

We know that having control over fiat can make things worse, especially if the government is not pro-people, do you have any views on bitcoin? if a country uses bitcoin which cannot be controlled then it will be good or bad because there is no government interference in the country's financial system

[adaseb]

Stagflation is worse in certain countries than others. For example in Canada we have it much worse that the USA.

We got bad GDP growth, we got bad inflation, food and housing is unaffordable, and our unemployment has been rising slowly since last May, basically the rate has increased almost every month. And I am sure there are other countries that have it just as bad.

USA however is not one of them. USA has good GDP currently and their unemployment rate is very low. However all of that can quickly change if something bad happens in the economy.

[YUriy1991]

I just want to be general. I also know that stagflation is characterized by high inflation and high unemployment and economic conditions can change at any time. I may not be an expert, but at first glance I think about inflation, especially wherever we are, if inflation continues and when the Personal Consumption Expenditure (PCE) price index experiences an increase, this is an indicator that has an impact and it is very possible that the central bank will tighten policy again in anticipation.

[Jawhead999]

Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.

It's because Gen Z is picky when it comes to work, they think everything that they see in social medias is representing the real world. Like a fresh graduate can make $1M per month, in 25 years old we should have two sources of income, in 30 years old we should achieve $1B, then retire early and reach financial freedom.

So, whenever they get a job that only pays $5K per month, they get mad and think they didn't deserved to earn that since the other people they see in social medias can make $1M per month.

[freedomgo]

if inflation continues and when the Personal Consumption Expenditure (PCE) price index experiences an increase, this is an indicator that has an impact and it is very possible that the central bank will tighten policy again in anticipation.

I would have ask you to expound more about the tightening policy part, but I made my own initiative to conduct a research. and accordingly, these are the factors that the central bank will do to combat high inflation.

source

A central bank can use several tools to combat high inflation, including:

Raising interest rates: By raising interest rates, the central bank makes borrowing more expensive, which can decrease spending and slow down economic growth. This in turn can decrease inflationary pressures.

Tightening monetary policy: The central bank can decrease the money supply by selling government bonds or raising reserve requirements for banks. This can also decrease spending and slow down economic growth, which can decrease inflationary pressures.

Intervening in the currency market: The central bank might try to achieve a currency appreciation which would then reduce the prices of imported goods and services and perhaps reduce cost-push inflation.

What do you think are the most effective and more realistic measure among the three?

[electronicash]

Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.

It's because Gen Z is picky when it comes to work, they think everything that they see in social medias is representing the real world. Like a fresh graduate can make $1M per month, in 25 years old we should have two sources of income, in 30 years old we should achieve $1B, then retire early and reach financial freedom.

So, whenever they get a job that only pays $5K per month, they get mad and think they didn't deserved to earn that since the other people they see in social medias can make $1M per month.

it's what they saw in movies. they think it's easy to make a living since their parents were earning a lot before the pandemic. the pandemic exposes how weak the economies of each country are. we are in recession but because the media says we are fine, people are still spending like they didn't see what is coming. and then the wars affecting the oil and gas made the prices so high while the layoff continues.

if the government is just bringing down the demands for gas, cars, housing, and commodities by making people poor, they need to create this recession. and FED saying "just a tiny bit more" means they are waiting for something to break.

[benalexis12]

As Op said, stagflation is a combination of high inflation and when this happens in a country, it's sure to be another burden on our consumers because basic goods will become expensive again. In short, this is what is called reduced purchasing power.

The only problem is that here in the US government, there are other officials who make you think everything they say is right and everything they do is wrong. Sometimes arrogance is allowed to exist, but the US country is in debt.

[EarnOnVictor]

Do you think that the fears of a potential stagflation creeping through the economy hold any substance? For sure having inflation remain high during a phase of contraction and reduced growth is worrying, especially after it peaked that high. But the FED keeps saying "just a tiny bit more", meaning that the economy needs to contract just a little bit more before we can be done with our money being worth increasingly less due to high inflation.  Perhaps they've lost control already, but is it too early to tell? Or perhaps is inflation the new norm?

On the other hand, there's an increasing amount of people that see the hypocrisy in trying to battle inflation by increasing unemployment, all while people keep working more hours with FIAT money's purchasing power decreasing. An increasing amount of people keep considering bitcoin as a means to defend against inflation. But will it pay off if the economy officially enters into stagflation?

Frankly, I'm still baffled by this write-up as you seem not to really understand economics not to talk of the US economy itself. There is nothing to worry about when it comes to the US economy right now, people are only creating panic where there is none, the economy is in capable hands, except that criticisms are too many and most of these critics do not understand what they are saying. Is it for the Inflation, GDP, and PMIs, all are fine with the US. But if it were to be in 2021/2022 that you made this article, I would have said there is a reason for this, not now. There is no economy without a challenge, the response of the government to it is what matters most and if there is a country in the world that is so good and are fit for the task in this regard, the US is the number, damn critics.

Let me start with the US inflation, the inflation is being beaten down by the government's measures and policies. The CPI has dropped to an average of 3.2% in a year, which is against the alarming figure of 6.5% a year earlier. Again, the GDP continues to grow, and as of the last, a whopping 4.9% annualized quarterly rate was declared, which is far better than the previous two years. And the Unemployment rate which just moved from 3.8% is currently at 3.9% and is still not alarming like other countries. This fluctuates month-monthly and who knows before the end of January if it would be below 3.7% again? Nonetheless, it's far better than many top world countries' rates as Canada's Unemployment rate is 5.70% and the average of the EU's Unemployment rate is about 6.5% even as Spain's Unemployment rate is 12.00%. So why the fear for the US with a 3.9% Unemployment rate?

In light of these and more like the consumer sentiment and CB Consumer confidence that stands at 63.8 and 102.6 respectively etc. and were recently released positively in the last releases, the USD economy is not such that should be worried about stagflation as the economy grows and citizens are never in fear.

You might want to continue the reading below:

[1] The US GDP
[2] The US Inflation
[3] The US Unemployment Rate
[4] The EU Unemployment Rate

[DeathAngel]

It’s really difficult to say & almost impossible to confidently answer. Stagflation is a rare and undesirable situation where an economy experiences slow growth, high unemployment & high inflation. Some economists have warned that stagflation might happen soon in some countries due to the impact of the COVID-19 pandemic, supply chain disruptions & rising energy prices plus the two wars we have going on. Others say that stagflation is unlikely because inflation is expected to be transitory & growth will rebound.

[stompix]

Do you think that the fears of a potential stagflation creeping through the economy hold any substance?

Not a single molecule
For stagflation you need:
1) high spiraling inflation
You have smaller inflation than before
https://www.bbc.com/news/business-67417986
2) no growth in production or recession
Again you have a growling GDP
https://www.fxstreet.com/news/us-gdp-q3-preview-when-is-the-preliminary-us-gdp-report-and-how-could-it-affect-eur-usd-202310260715
3) high unemployment
Again not a concern, comparing it to the start of the year is misleading because February was a record low
https://www.cnbc.com/2023/02/03/us-unemployment-hit-a-historic-low-economists-arent-sure-itll-stick.html

Zero out of 3 requirements, result: Stagflation rejected!

Another thing, pay more attention to what you quote:

Meanwhile, industrial production has remained in levels lower than those of 2022's summer

That is inflation adjusted data compared to 2017, as long as it's positive it shows growth!
Expand a bit the graph to 2000-2023 and you will see the difference!

Frankly, I'm still baffled by this write-up as you seem not to really understand economics not to talk of the US economy itself. There is nothing to worry about when it comes to the US economy right now, people are only creating panic where there is none, the economy is in capable hands, except that criticisms are too many and most of these critics do not understand what they are saying.

It's not about economic data, the US is one of the most hated countries on this forum, that's why you have a hundred topic about how it will crash burn the economy is doomed, the US dollar is worthless etc,etc, ton after ton till it becomes nauseating, it's envy and hate because of rejected greencards, that's all.

[arallmuus]

I want to share some basic statistics and definitions to make this thread more accessible to anyone, even people who haven't taken Econ101.

What is stagflation?

In economics, the term stagflation is used when there is almost no growth in production, yet there is high inflation, and unemployment is high.

Source: Simle English Wikipedia.

Isnt this topic is about 1.5 years late to be discussed? I mean if we are still in the covid19 era then this term would be interesting to be discussed. In majority of the countries, I believe GDP is soaring after we are out of the covid19 era and inflation is not as high as before so definitely we are not in stagflation right now nor are we actually heading to this

On the other hand, there's an increasing amount of people that see the hypocrisy in trying to battle inflation by increasing unemployment

Weirdest stuff that I've read so far

it's envy and hate because of rejected greencards, that's all.

Sounds about right

[DVlog]

Stagflation is worse in certain countries than others. For example in Canada we have it much worse that the USA.

We got bad GDP growth, we got bad inflation, food and housing is unaffordable, and our unemployment has been rising slowly since last May, basically the rate has increased almost every month. And I am sure there are other countries that have it just as bad.

USA however is not one of them. USA has good GDP currently and their unemployment rate is very low. However all of that can quickly change if something bad happens in the economy.

What i am doing can be a good example of this. We are losing our currency value against USD, food prices are skyrocketing, the unemployment rate is at its peak, the market is controlled by syndicates, and loan defaults are a common practice among the commercial banking sectors. Our government shows made up statistics publicly to cover up the worst situation. I am not seeing anything good happening in our country very soon as the political tension is rising very fast. 

[harapan]

It's because Gen Z is picky when it comes to work, they think everything that they see in social medias is representing the real world. Like a fresh graduate can make $1M per month, in 25 years old we should have two sources of income, in 30 years old we should achieve $1B, then retire early and reach financial freedom.

So, whenever they get a job that only pays $5K per month, they get mad and think they didn't deserved to earn that since the other people they see in social medias can make $1M per month.

It's funny you should blame young people for the rate of unemployment. Very funny.
Not like what you said about Gen Z being picky when it comes to work and being influenced by social media ain't true, but to sum up that that's the cause of unemployment is a different level. Besides, being picky is not a bad thing, you can't accept every job that comes your way. You can't compare someone who did a job for $8 per hour 10 years ago to someone doing the same job for the same pay rate with the level of inflation we are right now. So yea, it's okay to demand more. You make it sound like rejecting a job that pays peanut means you're expecting a job that pays a million a week.

I agree that social media has affected a lot of young people negativity. They want so much more, but the has also made them resourceful don't you think?
If you can't accept a job that pays $5k a month, then you've got to work extremely hard and smart to earn $15k a month. It only becomes stupid and a problem when you refuse a job that pays $5k a month then you just sit down expecting a better one without working hard for it.

BTW, I don't think there are many Gen Zs that will reject a $5k per month job or feel it's too small.

[Alpha Marine]

It's not about economic data, the US is one of the most hated countries on this forum, that's why you have a hundred topic about how it will crash burn the economy is doomed, the US dollar is worthless etc, etc, ton after ton till it becomes nauseating, it's envy and hate because of rejected green cards, that's all.

Not just on the forum, in general, the US is one of the most hated countries in the world but I don't think it's because of rejected green cards lol. A person looking for green card won't hate on the country. It's misinformation.
Some people might have valid reasons why they hate the States, but I believe a lot is based on misinformation and propaganda.
When you're at the top you're at the top you face a lot of scrutiny and criticism and this leads to a lot of people who do not really understand the situation asking questions.

Sometimes arrogance is allowed to exist, but the US country is in debt.

Is there a single country in the world not in debt? If there is how good is their economy? The debt of a country doesn't mean that country is sinking. Every country takes loans. The problem comes when the country takes those loans for consumption and not for production.
If they want to go into a very expensive project, do you want them to just print money and use it for the project thereby increasing inflation? No, they won't do that. They'll take loans and finance the project then pay back the loan from the proceeds of the investment over time.

[Jawhead999]

If you can't accept a job that pays $5k a month, then you've got to work extremely hard and smart to earn $15k a month. It only becomes stupid and a problem when you refuse a job that pays $5k a month then you just sit down expecting a better one without working hard for it.

And the reality is many people are stuck in second option instead of the first option. They blame other people success because of they have rich parents, they blame their boss for promoting other employee, they blame their parents because they didn't get what the other people get, etc instead of looking to themselves and try to become better people.

Gen Z want a high paying job with less effort, that's why there's always a person fall to ponzi scheme even though it's an old school scam and everyone already knew it.

BTW, I don't think there are many Gen Zs that will reject a $5k per month job or feel it's too small.

It just an example, depends on where you live.

If you live in a country where the minimum salary is $300 per month, think it was $200 instead of $5K. $200 even though not reach the minimum salary, but it's still enough to live for a month.

[Yamane_Keto]

Recession and inflation are two terms we hear almost daily, but they are symptoms of many causes in the economy. These causes may be related, such that solving one of them will increase the problems of the other, or unrelated, so that one can be solved without affecting the other. The role of economists and central banks is to maintain a certain level of unemployment while Controlled inflation of around 2%, and this will not happen soon because of the increasing spending by the United States and the distribution of its debt throughout the world, and all governments that pay in dollars will bear this debt.

We will be in a cycle in which inflation/Recession will start to be higher than normal, but how bad it is will be decided by the state, meaning that we will not return to 2%, but inflation will be controlled.

[tygeade]

It’s really difficult to say & almost impossible to confidently answer. Stagflation is a rare and undesirable situation where an economy experiences slow growth, high unemployment & high inflation. Some economists have warned that stagflation might happen soon in some countries due to the impact of the COVID-19 pandemic, supply chain disruptions & rising energy prices plus the two wars we have going on. Others say that stagflation is unlikely because inflation is expected to be transitory & growth will rebound.

Huh? Isn't it happening like almost any time? Maybe we can experience a few relief sometimes but then again the issue comes alive. I don't know what is our status now, but if we are on the relief side, then I wouldn't be surprised to see the issue come later on. COVID-19 is an old issue, same goes with the war and we have recovered greatly from them.

So, I wouldn't say that it will be the cause but there should be other one, and that is also the latest. Those who say it's unlikely might be the people who are not really into these things or they are too young yet to understand it. They don't really know or they don't really care if what is going on now on theirs and to the global economy.