Saturday, June 28, 2025

Stagflation Threatens to Hit the US. as It Did 50 Years Ago

OpEd: Even if oil prices aren't the reason now, immigration policy and tariffs create concerns about inflation aside stagnant economic growth, as the U.S. saw in the 1970s and early '80s.

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JPMorgan sees tariff-induced US 'stagflationary' slowdown in 2025 reut.rs/4lm6RRn

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-- Reuters (@reuters.com) Jun 25, 2025 at 10:15 AM

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More from the OpEd ...

... Here we are a half-century later, and this history feels relevant.

The U.S. and Iran remain at odds, this time over Iran's aspirations to become a nuclear power. Fortunately, we have dodged a bullet, at least for now. Oil prices jumped in the lead-up to the U.S. bombing of Iran's nuclear facilities but have since receded. But there's no telling where this script is going, and stagflation is a serious worry even if higher oil prices aren't part of it.

That's because the U.S. now has much higher tariffs in place. While prices have yet to increase meaningfully since President Donald Trump announced the increased tariffs, they will soon enough.

The massive front-loading of imports earlier in the year before the imposition of the tariffs has temporarily attenuated the fallout on prices. Prices will not significantly rise until the non-tariffed inventories are sold off. But that's imminent.

Small businesses are especially primed to raise prices. Close to one-third of respondents to a prominent small business survey say they plan to raise prices. Other than during the pandemic, rarely has this been so high.

Larger businesses will likely wait longer to raise prices, as they have wider profit margins and more financial flexibility. Besides, they want to avoid losing their market share or becoming a political target, particularly if the tariffs prove to be temporary. That seems increasingly unlikely, and once that becomes clearer, they, too, will raise prices.

The crackdown on foreign immigration adds to stagflation concerns.

The extent of the immigration restrictions is still uncertain, but it is clear that asylum-seekers and the undocumented have stopped crossing the southern U.S. border. Businesses that rely on immigrant workers will find it more difficult to operate, let alone expand, and they will need to raise prices given their higher labor costs. ...



#1 | Posted by LampLighter at 2025-06-27 10:28 PM

Yeah, stagflation, where the growth of the economy slows and the inflation rate rises, is brutal.

The recent numbers on the economy seem to show a slowing in the growth of the economy, and a slow rising of the inflation rate.

OK, at this point, I will say, this looks like little more than a "hint" of stagflation.

But I have to ask, the CPE stats are from May, so, a month old.

Where are we now?

#2 | Posted by LampLighter at 2025-06-27 10:32 PM

Fagnation

#3 | Posted by LegallyYourDead at 2025-06-27 11:26 PM

@#3

Usually, I appreciate your alias' comments.

The spontaneity of them has always intrigued me.

But your #3 is so unlike its prior comments.

What's going on?


#4 | Posted by LampLighter at 2025-06-27 11:46 PM

You know, baseball players get into the Hall of Fame by hitting only a third of the time.

#5 | Posted by LegallyYourDead at 2025-06-28 12:17 AM

You know, baseball players get into the Hall of Fame by hitting only a third of the time.

Tiger Woods won just over 20% of his tournaments.

#6 | Posted by REDIAL at 2025-06-28 12:23 AM

A bunch of them were majors though. To be fair.

#7 | Posted by LegallyYourDead at 2025-06-28 12:47 AM

If the United States experiences stagflation is Donald Trump still the Chosen One?

#8 | Posted by Zed at 2025-06-28 08:54 AM

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