Posted on 06/16/2006 8:23:26 AM PDT by Hydroshock
It's not stagflation, but what is it?
Rising inflation, rising unemployment and slowing growth in the 1970s created stagflation, a phenomenon that led to double-digit interest rates in the early 1980s as the U.S. Federal Reserve tried to fix the damage made by loose monetary policies in the previous decade.
Then as now, there was unrest in the Middle East and an oil shock that drove energy prices sharply higher. There were also steep U.S. budget deficits. The dollar was falling and commodity prices were rising.
But economists say it is unlikely that the economy will slump into the painful inflationary days of the late 1970s and early '80s. Globalization puts downward pressure on prices because companies have to compete more aggressively. Also, the Fed seems determined not to repeat the lessons of the '70s.
"If we're headed toward stagflation, it's very low-altitude stagflation," says Mark Vitner, chief economist at Wachovia (nyse: WB - news - people ). "That's the way a pessimist would look at the world in a Goldilocks economy."
So it's not too hot, it's not too cold, it's just right?
(Excerpt) Read more at forbes.com ...
Okey dokey.
Is this one of the libs on the "business block" on Fox's Saturday am shows?
Hey Hydro, just for fun why don't search for good news every now and then? It might do you good.
Are you as depressing to yourself as you are to the rest of us?
Inflation? Unemployment? Not here.
Where I'm at they're desperately looking for salestypes, IT techies, anyone and cannot find them. The only choice is to kill the project or outsource the IT work to India... not due to price, but due to lack of qualified people here. And they'll have to figure out something when all those salestypes age 60-65 soon retire.
I have a rental vacancy coming up. I haven't raised rent in 4 years. I put out ads with a 10% jump in rent to the next even number. It has become very clear to me that I will have to return to my 2003 rents and will not be able to raise the rent here in cornland. I checked the internet for Chicago burbs I know well. They also have an oversupply of rentals and a weak demand market.
No inflation in rents. The reason is supply and demand. Due to the lowest unemployment ever, and plentiful cheap mortgage money and poor people now able to buy their own house.... and due to the increased demand for housing from millions of immigrants (legal and illegal) the result is that there is strong demand to buy and sell housing. Thus housing prices continue upward making rich those of us who bought earlier.
But there is weak demand for rental housing. Pity us poor landlords ... maybe we should ask for subsidies "because the economy is too good."
Tuesday's price and retail sales data were further evidence that the economy is slowing. Consumer spending drives two-thirds of growth in gross domestic product, and it was so robust in the first quarter that it pushed GDP to 5.3%, the highest in more than two years. But most economists say GDP is expected to slow significantly for the second half of the year, particularly if consumer indebtedness and high energy prices combine to crimp spending.”
Unemployment at 4.6% and GDP at 5.3%. Boy was the economy bad then (June 2006) as compared to now!!!! /s
Amazing, isn’t it? Now those were the days
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