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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Well, you know what it means and it’s already happening in France

“Stagflation can be defined as a prolonged period in which an economy experiences persistently high inflation, high unemployment rates, and stagnant aggregate demand. It is a period where central banks experience a situation in which monetary tools meant to control rising inflation lead to higher unemployment and lower economic production.“ Forbes

Businesses closing, people losing their jobs etc[/quote]

We don’t have high unemployment though. [/quote]

Yeah this is what I don’t get. Where I work (nonprofit) we have solid funding for the next three years, so much so we need to make several hires and even then we could get zero funding for the next three years and be absolutely fine including annual COLAs and benefits[/quote]

Here's your problem.  Data published this week showed productivity is taking a nosedive. Meanwhile, the gap between the number of job openings and job seekers keeps widening. Wages keep going up. Productivity is not keeping up with wage gains, and given the tight labor market, it means we have significant cost-push inflation. Prices moon --> workers demand more salary --- > tight labor market means workers have leverage --> salaries moon but productivity doesn't keep up -- > producers' margins are squeezed; therefore, they raise price. Rinse and repeat over and over again. Rising wages sounds nice for the middle class, but data also show real wages after inflation are negative, meaning the middle class is actually losing purchasing power due to inflation even though they're seeing wage gains.

This is a much more serious and difficult problem than inflation driven by consumption, which the Fed can combat more easily. Cost-push inflation is more permanent and much stickier. The story that inflation has peaked and that a soft landing is possible is hot garbage. The only way to stop this from spiraling out of control is through a recession. It will get much uglier from here on out for both the economy and our portfolios.[/quote]

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