According to Google Trends, it really is true: Stagflation = Recession plus Inflation
>
Stagflation
Recession
Inflation
Fun with Google Trends: Stagflation
March 12, 2008 1:32pm by Barry Ritholtz
This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client. References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers Please see disclosures here: https://ritholtzwealth.com/blog-disclosures/
What's been said:
Discussions found on the web:Posted Under
Previous Post
So Long, and Thanks For All the Fish!
The number of articles published that mention “stagflation” have surged in recent weeks to a new extreme, highlighting investor angst and the headwinds for risky assets.
There is certainly plenty for investors to worry about in the current environment. The global economy and earnings backdrop continues to deteriorate, U.S. housing shows little sign of improving, and the credit crunch continues to intensify. Indeed, it would seem that each positive policy development is met with the fall of another sub-prime related domino. The latest development has been the failure of some investment firms to meet margin calls, sparking fears of forced selling and further deleveraging.
To amplify concerns, energy and food prices continue to surge, helping to stoke inflation fears.
However, we are less worried about broad-based price pressures. It is unlikely that rising commodity prices will lead to a rise in core CPI inflation because manufacturers will be unable to raise prices amidst weak demand. Moreover, the softening job market will help prevent second round effects.
Bottom line: Stagflation has returned as a hot word. However, as occurred the last time stagflation had its moment in the limelight in 1990, weak growth will soon undermine pricing power.
My question is, what happens if/when Congress gets involved with saving the mortgage market, etc? What happens to equities? And believe they are going to step in!
Also fun to check “foreclosure” in google trends – The top search cities – Richardson, TX, Miami, Tampa, Orlando, Atlanta.
side note – google trends is a lot of fun for data geeks.
Google trends, what a cool tool. Why haven’t my kids told me about this. It’s their JOB!
Here’s another good one: BAILOUT
http://www.google.com/trends?q=bailout&ctab=0&geo=US&geor=all&date=ytd&sort=0
History shows that as the economy enters a recession/downturn/slowdown or whatever you want to call it, the FED moves to stimulate activity by cutting rates. That’s the cause and inflation is the effect. Once inflation becomes entrenched consumers & companies cut back on spending which tips the economy into the recession/downturn/slowdown that the rate cuts were designed to avoid. We’ve seen this movie before and it always ends the same way, badly. If they would just leave rates alone everything else would work itself out. But they won’t. And there is no reason why they should cut by 3/4 of a point next week but they will.
Oy Barry,
It was fading yesterday afternoon. I got greedy and crazy short (as you said to get crazy short).
I am hurting now underwater.
Should I cover or wait for a pullback?
What if there is no pullback? Oy, I am losing my tokhes. Gezegenen zikh mit gelt. Dos iz a defitsiter gesheft.
i luv it when CNBC says the spike in oil is “all about the US $”. sure, that’s some part of it. it’s also about the resignation of Admiral Fallon and the rolling October surprise bombing campaign in Iran and Syria. good work, George! good work, Dick! and i mean that. there’s really no reason oil should not be much higher and these two bozos and their henchmen will insure that happens.
Speaking of stagflation, you gotta love the incredible sinking dollar … and how key commodities like oil are responding. The economy may stink. But if the dollar continues its long march to confetti-land, then we’re going to have rising prices for dollar-denominated commodities anyhow. Speaking of which, I can’t wait to see the import price report that’s due out tomorrow.
Es tut mir,
Pokroete Vas Durock!
2nd’s to Pat G.
That’s exactly what’s gonna happen. For some reason (Greenspan?) we have bought the myth that money matters vis a vis real growth. Sorry, except for a short-term adjustment period, it doesn’t. More or less of it relative to real growth just changes the accounting. The reality remains the same. And the reality is that you can’t borrow long for short-term wants and needs and expect to get rich.
Core rate (ex-food and energy):
1974: 6%
1979: 9%
2008: 2.2%
How about “Stag ex-inflation?”
I hope you all took note of CENTCOM Admiral Fallon “resigning” yesterday.
Kiss off any chance of elections…..
and hello to $10 gas…
And Cheney??? Well he’s making the rounds starting sunday….
If I was a citizen of Syria or Iran I’d be looking at luggage for an extended “vacation”.
What a fucking quagmire we have
Ciao
MS
Muckdog,
You might also want to note that core inflation was around 3% in 1972/73. That was a time of USD weakness, BOP and trade deficits, an unresolved and unpaid-for war, and surging food prices.
Muckdog, they revamped the core equation back several years…I’m guessing 1997ish?
There were 2 basic revisions to the calculation for CPI. Go to Williams ‘Shadow Gov Stats’ which is linked to this site. He explains it quite well.
We need not rehash the trade down theory or hedonics.
Core rate (ex-food and energy):
1974: 6%
1979: 9%
2008: 2.2%
How about “Stag ex-inflation?”
You know I’ve never known anyone alive in my life who doesn’t eat and use energy in one form or another. Have you?
The US can pursue any basket of policies it can come up with. If the decline in the exchange rate of the dollar isn’t stopped & the current account deficit isn’t eliminated the US will be forever saddled with stagflation.
When I was very young, my memories of the 1970s and stagflation were; high gas prices and things were not getting done like; road maintenance, building painting, auto body repair, people were being treated badly and most people were grumpy and did not care. No one trusted the government, and I think the basic problem was oil prices, and businesses have to raise their prices.
The markets should be afraid of stagflation and the lower U.S. dollar.
“We have seen better days.”
William Shakespeare
The last time this occoured you could buy a BMW and resell it a year later for what you paid for it…. now about those mclass cars….