Stagflation

Since the latest growth numbers have come out, much ink has been spilled over the question of whether the economy is in a recession. Perhaps unsurprisingly, the Biden administration tried to get out ahead of Thursday’s release with a press statement noting that back-to-back quarters of negative growth doesn't necessarily mean a recession. Also predictably, Republicans strongly rebuked the idea, saying, “You can’t change reality by arguing over definitions.” Both sides of the debate will continue to play out, and both sides will continue to miss the point. Ultimately, it doesn’t matter very much whether growth goes up or down by 0.2 percent. What matters is the general trajectory of the economy. And on that front, the Biden track record is mixed at best.

The media are abuzz these days about a purported “return to the 1970s.” Generally speaking, such chatter is not intended kindly, for many today would likely agree with the sardonic assessment of the Seventies made by the editors of New West magazine as that decade wound down: “It was the worst of times, it was the worst of times.” And not just because of the popularity of bell-bottom pants, platform shoes, and disco music. In the Seventies, we had problems far more troubling — more troubling even than the pop group ABBA. For starters, we saw a quadrupling of real oil prices between 1973 and 1979. We suffered high rates of both inflation and unemployment, which hitherto varied inversely, leading to the creation of the portmanteau “stagflation.