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Opinion
Matthew A. Winkler

Stagflation Is Looming, Right? Wrong, Economists Say

The headlines shouting “inflation” and “contraction” are contradicted by a consensus of forecasting professionals who expect price growth to abate and business to hold up nicely.

Not what recessions usually look like.

Not what recessions usually look like.

Photographer: Jim Watson/AFP via Getty Images

Wherever you get your news, there's no escaping the perception that rising prices are breaking the US economy. Recession is almost a foregone conclusion on the Bloomberg terminal, which aggregates 150,000 news sources with every bulletin categorized and counted. Headlines with the word “inflation,” increased 345% to 186,000 times a month since the beginning of 2020, while “strong economy” declined 48% to 1,766 times monthly.

That's understandable amid a stock market rout and when so many prominent commentators, including former Treasury Secretary Lawrence Summers and former Goldman Sachs chief executive Lloyd Blankfein, have predicted resurgent inflation and now say recession is increasingly likely. They’re not impressed that US gross domestic product has rebounded from the Covid-19 shock at the fastest pace in modern times, overtaking its pre-pandemic high of $21.4 trillion. Nor are they relieved by the fact that the Federal Reserve's preferred measure of prices, the Personal Consumption Expenditure Core Price Index, is nowhere near replicating the runaway scourge of the 1970s despite rising the most this year since 1983.