Economics Explained Stagflation
Sep 30, 2025
Stagflation is making a comeback, creating a perfect storm of rising unemployment, slow growth, and stubborn inflation. The dangers of this economic combo are discussed, along with the failing objectives of the Fed. Experts dive into how the USD's reserve status might not shield it from problems. There's a critical look at whether official job statistics are telling the whole story, and the impact of current policies on economic stability is explored. If this crisis intensifies, the ripple effects could be felt worldwide!
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Why Stagflation Is So Dangerous
- Stagflation means rising unemployment and slow growth with persistent inflation happening simultaneously.
- This combo is dangerous because fixes for one problem tend to worsen the others.
Fed's Dual Mandate Under Strain
- The Fed's dual mandate is to maintain full employment and stable prices, so stagflation implies it's failing both goals.
- 'Full employment' and 'stable prices' have technical meanings that matter for policy decisions.
Numbers Can Be Misleading
- Official unemployment and inflation figures can hide problems due to measurement limitations and survey issues.
- Revisions and falling labour force participation mean headline numbers may understate real weakness.