via Mish Talk:
What is Stagflation?
Stagflation is recession coupled with inflation.
Great Depression era economist John Maynard Keynes thought the combination of recession and inflation was impossible.
That should have ended Keynesian nonsense right then and there. Unfortunately, it didn’t.
Keynes believes in government spending, stimulus, and other economic free money prime the pump nonsense.
Governments and academia latched on to free money and stimulus ideas. Thus, it’s no wonder Keynesian nonsense is the overwhelming consensus thinking.
The October 5 GDPNow forecast is for 1.3% growth. That’s low and at the stall rate, but seemingly not recession material.
Look closer. Real Final Sales are the true bottom line measure of GDP.
Inventory changes net to zero over time.
The latest GDPNow measure of real final sales is -1.0%. That is recessionary.
If these numbers stick, third-quarter GDP will only be positive based on an inventory build.
Case For Recession
- Tax hikes: Recessionary
- Tariffs (Biden is following Trump and threatens more): Recessionary
- Stock Market Bubbles: Inflationary While Expanding, Deflationary and Recessionary when collapsing.
- Energy Policy: Mandating 80% clean energy by 2030: Stagflationary
- Biden’s $1.5 trillion to $3.5 Trillion “Build Back Better” Plan: Inflationary
- Continuing Supply Chain Woes: Stagflationary
- Wage Hike Escalations: Inflationary