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The Recession Is Here; Will Stagflation Follow?


  • We’ve had two consecutive quarters of negative GDP growth, but what’s happening under the hood?
  • The hangover of pandemic policies like lockdowns, in addition to fiscal, monetary, and regulatory policies animated by ideology rather than sound economic principles, are bearing their fruit.
  • Despite the constant attempts to pin the rise in the general price level on Putin’s invasion of Ukraine in February 2022, it’s readily apparent that prices, far and wide, began rising in early 2021.
  • Bearing in mind the lag associated with employment, it is no longer unthinkable that stagflation may be ahead.

The fractured economy represented by a cracked egg depicting the decline in buying power of dollar to pennies

pfb1/iStock via Getty Images

By Peter C. Earle

With Thursday’s abysmal 2nd quarter GDP number, the US is officially in a recession. The path to a soft landing for the US economy has virtually closed. The US economy shrank 0.9 percent in

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AIER educates Americans on the value of personal freedom, free enterprise, property rights, limited government and sound money. Our ongoing scientific research demonstrates the importance of these principles in advancing peace, prosperity and human progress. www.aier.orgFounded in 1933, AIER is a donor-based non-profit economic research organization. We represent no fund, concentration of wealth, or other special interests, and no advertising is accepted in our publications. Financial support is provided by tax-deductible contributions, and by the earnings of our wholly owned investment advisory organization, American Investment Services, Inc. (http://www.americaninvestment.com/)

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Comments (8)

Stagflation ahead?!? Stagflation is here right now! Two quarters of negative GDP combined with 8-12% inflation prints = screaming stagflation. Only missing ingredient is large job losses, but that is coming
O. Young Kwon profile picture
No recession here yet. No "stagflation" is expected.
"Nearly 70 percent of unemployment claimants say they earned more out of work than they did employed."
Hard to believe this data.
@katmandu100 It's true as roughly 2/3 of income earners made less at their jobs than what they received from enhanced unemployment. You can verify by examining 2019 median income state by state and compare it to what they were handing out in enhanced unemployment in 2020
Biden admin changed the definition of a recession so we are not in a recession.
Dale Roberts profile picture
Uh, we're already in stagflation.

Slowing growth (well recession) and still hot inflation = stagflation.

Who's prepared? Most are not.
zeruff profile picture
"Bearing in mind the lag associated with employment, it is no longer unthinkable that stagflation may be ahead."

Is that a general rule in a recession, that high unemployment tends to lag?
@zeruff yes employment is a lagging indicator and labor reports will get edited way after the fact to show all those job gains report showed actually didn't happen
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