We’ve put off using this word for quite some time now…we’ve been saying “disinflation” and “non-flation” and all kinds of stupid stuff.
But this morning’s economic releases will make it very tough for us to stave the “S” Word for much longer as Mark Gongloff notes…
This morning’s data have that stagflation-y smell to them, and futures are even uglier than they were earlier.
CPI jumped 0.5% in July, compared with expectations of 0.2%. Ouch. Core CPI, stripping out food and energy, was up 0.2%, which matched expectations.
Weekly jobless claims rose 9,000 to 408,000, back above that magical 400,000 line. Economists expected claims to come in at 400,000. It’s not really so much a magical line as it is a psychological line. Either way, claims are still too high for a healthy economy.
The trouble with labels is that we still have rampant deflation in home prices and wages, the two areas where we’re practically dying to produce a little inflation. Instead we find ourselves in a nightmarish Tim Burton-esque dreamscape, all billowing black clouds and double-time orchestral strings.