Stagflation arrives a bit early
Like the relatives on their way to visit you, stagflation surprised by showing up a bit early. As you may remember, stagflation was due in the summer or later this year. Well, here it is, according to the latest news reports:
Real gross domestic product (GDP) decreased at an annual rate of 1.4 percent in the first quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 6.9 percent.
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to "Source Data for the Advance Estimate" on page 3). The "second" estimate for the first quarter, based on more complete data, will be released on May 26, 2022.
Okay, so the final report will be here in a month. Maybe they will "revise" the number and put us back in the black or go deeper in the red. I guess we will learn soon enough, but going from plus 6.9% to minus 1.4% is bad news for voters paying more for gasoline and lettuce than ever.
Politically speaking, this report is terrible news for a White House desperately trying to put a happy face on things, from the economic consequences of the war in Ukraine to the Federal Reserve Bank raising rates.
Some of us are old enough to remember the last time stagflation was around, and it was not pretty. I guess I'll get a chance to see the 2022 remake of the 1982 movie. I don't think I'll like the new one more than the old one.
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