Stagflation: it's here

[AllieB]

Stagflation: a term coined by economists in the 1970s to describe the previously unprecedented combination of slow economic growth and rising prices.

http://www.internetional.se/toft/stagflation.htm

I haven't had a raise since Clinton was President, even though I've been promoted and have more responsibility. Yes, I've gotten rewards like stock options (useless for the moment since we're not a public company), and I got $200 bonus last Christmas for finishing a massive end-of-year project ahead of schedule. My husband has gotten cost of living raises and bonuses, but only because he works for a small foreign company and has a great boss.

The government has a new way of measuring inflation-one that does not count energy and food costs. Since my food bill has nearly doubled in 3 years, and I won't even comment on the cost of gas and home heating oil, how can anyone in government claim the economy is doing well?

[Nederland]

1. By what measure?

GDP growth is healthy and inflation is low.

When you say "it's here", do you actually mean "it's here" or are you making a prediction?


...cause the numbers don't look anything like the 70's.

[depakid]

3. GDP has nothing to do with wealth creation

It's not a valid measure. Kind of like the CPI in that regard. Or the unemployment rate.

[Autonomy]

4. The OP addressed the inflation rate

as manipulated by excluding essentials that are on the rise.

[AllieB]

6. Exactly, Autonomy. The measures are completely different.

than they were in the '70s. But I don't want to rain on the parade of those championing Bush's sound economic policies, since they are obviously benefiting like a whopping 10% of Americans.

[slide to the left]

5. inflation is not low

Its near the top of the "ok" level. Fisher (dallas fed pres) has a way of hinting at things he shouldn't, like the inflation level. Anyway, enough about Fisher. The fed has been rasing interest rates for 22 months straight... why you ask... to slow inflation.

[nashville_brook]

13. inflation is here

http://business.timesonline.co.uk/article/0,,16849-2160208,00.html

US inflation tests Fed's comfort zone
By Rhys Blakely

Higher incomes helped American consumers hike their spending by more than expected in March, despite large petrol price rises, but inflation also accelerated to the top of the Federal Reserve’s target range.

[Nederland]

15. To the responses above

None of you answered my question: by what measure?

By the accepted economic measures, there WAS stagflation in the 1970's. GDP growth was low or negative and inflation was in double digits. So I'm asking, when the OP says that stagflation is here, what measurements is s/he looking at? Standard government issued statistics or what? It's a simple question that implies nothing about the answer.

[MostlyLurks]

17. Perhaps she was speaking on a more personal level.

The definition of "stagflation" as she's defined it can be based on a microeconomic assessment as well as a macroeconomic.

Her story bears that out: her personal income has remained flat (possibily family too, but that's less clear) while her expenses have undoubtedly gone up. So maybe she was relating her personal story as a harbinger or indicator of stagflation in a larger sense. Or maybe she was simply speaking solely of her personal situation. Economics, like politics, is all local, know what I mean? I tend to think the latter is the explanation.

Mostly

[AllieB]

18. If the costs of energy and fuel were figured into the inflation index

then stagflation would no doubt exist. It is not based on my personal experience, or even the experiences of the majority of Americans. It is based upon real wage growth and the old inflation index, which included the above costs.

[MostlyLurks]

19. But I think Nederland's Point is this:

I can't speak for him/her, only extrapolate:

It's all well and good to say IF the numbers included these measures then we'd have stagflation...

But that's only tru if you know the specific values of the numbers that are excluded. So when you say "it's definitely here", that implies that you know what the inflationary values of energy and food costs. I think that's what s/he is getting at: what specific values are you plugging in for those excluded costs? I don't necessarily know that Nederlander is agreeing or disagreeing with you but is rather questioning the basis in fact of the statement you're making. Which is certainly his/her right.

Personally, my situation mimics your own: haven't had a raise (not even COL) in four years now, SO has gotten some COL and some merit, but overall our dollars have shrunk.

Mostly

[Nederland]

20. Question

If fuel costs are included, what is the inflation rate? Please provide a link to demonstrate the source of your data. Thanks.

[Autonomy]

2. how can anyone in government claim the economy is doing well?

Because the owners and investor class are cleaning up. IOW, the rich are getting richer, so how can things be bad?

[leftofthedial]

7. I haven't had a real job since Clinton was president

[AllieB]

8. I know a lot of people in your predicament

Many of them have advanced degrees and many years of experience in their fields. My husband and I consider ourselves very lucky.

[AX10]

9. The government changed the measurement methods of....

inflation since the 70's to make inflation look lower than it really is.

[0007]

10. 'Oh the economy is doing great while inflation is racing

at break neck speed.

[Sammy Pepys]

11. So what measure are we using to determine we're experiencing stagflation?

This is an area where Dems need to be right on point. We have to be able to explain this stuff clearly.

[AllieB]

16. See everyone's explanation about how inflation is now measured

everyone knows the costs of food and energy are soaring. I agree that the Dems need to develop some sound bytes around the economy.

[Mr_Jefferson_24]

12. "The government has a new way...

...of measuring inflation-one that does not count energy and food costs."

The government has a new way a avoiding reality: BushCo's Bizarro World, where up is down, black is white, torture is legal, inflation's in check, economy doing great, ports are secure, spending under control, great progress in Iraq, international relations couldn't be better, poverty being stamped out, New Orleans bouncing right back, wonderful health care system taking care of everybody, and on, and on, and on.

Not since the Great Depression have things been this good---CHEER UP, PEOPLE!!!

[nashville_brook]

14. no food or energy in inflation measures -- also fed is printing money

we're not sinking, we're soaring!

[Nederland]

21. Question

The government has a new way of measuring inflation-one that does not count energy and food costs.

Where did you read that?