Stagflation Is Poised for a Comeback
It’s unlikely that the US will suffer from inflation and unemployment as high as they were in the 1970s, but the conditions are ripe.
Egg-specting inflation?
Photographer: Justin Sullivan/Getty Images North AmericaMight this be the year that stagflation returns to the US? It has been half a century: The last time the US economy had both excessively high inflation and unduly high unemployment was in the mid-1970s, with inflation rates reaching 12.2% in 1974 and unemployment at 8.5% in 1975.
The new stagflation is unlikely to be as extreme as that. The latest inflation report came in at 3% for 2024, up from 2.4% in September. Still, there are few signs that the rate is falling. Recent data suggest that rents will increase at a modestly higher rate than in times past, and shelter costs account for about one-third of the consumer price index. Ongoing wage growth is another inflationary pressure.