Inflation, in short, continues running at near 40-year highs.
For the first time since the 1970s, we are at risk of entering a period of worldwide stagflation — meaning high inflation combined with low or negative growth.
Notably, the preliminary estimate of America’s GDP for the first quarter of 2022 showed an outright decline, though we should not read too much into preliminary data for just one quarter. We can expect a slowing US and world economy however as the Federal Reserve raises interest rates in order to reduce the inflation rate and as other disruptions hit the world economy.President Joe Biden has called the inflation “Putin’s price hike,” implying Russia’s invasion of Ukraine is the main culprit for the jump in inflation. While it has played a role, we need to look more deeply.Just as was the case 40 years ago, when I published my first book, “The Economics of Worldwide Stagflation,” there are many factors in play….
