All posts tagged: Stagflation

When The Persian Gulf Supply Shock Meets The Warsh Fed: Stagflation & The Coming AI Bubble Bust

When The Persian Gulf Supply Shock Meets The Warsh Fed: Stagflation & The Coming AI Bubble Bust

Published by Jenni Sidey

Authored by David Stockman via InternationalMan.com, Here is a salient place to start regarding the economic impact of the Donald’s misbegotten war on Iran: To wit, approximately 7 billion ton-miles of freight moves by truck each and every day in the USA, which heavy truck fleet consumes upwards of 2.9 million barrels per day (mb/d) of diesel fuel. Alas, the price of diesel fuel was about $3.55/gallon both a year ago and as of early January 2026, but has since soared by more than+$2.00 per gallon to around $5.60 recently. That’s a 56% rise in the cost of pumping goods and commodities through the arteries of the US economy. On an annualized basis, the diesel fuel bill for the US truck fleet went from $155 billion per year to $250 billion per year at current oil prices. The big question, of course, is through which channel these drastically higher fuel acquisition costs will be absorbed—in higher prices or reduced output? And that pertains not just to the microcosm of the trucking sector, but the entire GDP now being battered …

Eurozone growth limps on as Iran war fuels stagflation fears – POLITICO

Eurozone growth limps on as Iran war fuels stagflation fears – POLITICO

Published by Sam Flores

The number incorporated weaker than expected figures from France, where GDP was flat from the fourth quarter. But the region’s largest economy Germany performed better than feared, growing 0.3 percent, while growth in Italy and Spain slowed by less than forecast. The war — and the resulting surge in oil and gas prices — has sharply changed the economy’s trajectory. The German government has halved its growth forecast for this year to only 0.5 percent. The International Monetary Fund earlier this month downgraded its 2026 growth forecast for the eurozone to 1.1 percent, from a prior estimate of 1.3 percent. It warned that rising prices and weaker activity are pushing the region toward a more stagflationary environment. Inflation, by contrast, is on the way up, due to the surge in energy costs. The headline inflation rate jumped to 3.0 percent in April, Eurostat said in a separate release. Core inflation, which strips out volatile oil and food prices and is seen as a bellwether for underlying trends, eased to 2.1 percent from 2.2 previously, but …

Rachel Reeves’s rubbish plan has just shattered – credibility is ruins | Politics | News

Rachel Reeves’s rubbish plan has just shattered – credibility is ruins | Politics | News

Published by Sam Flores

The Labour chancellor promised her “Plan for Change” would reboot growth, steady the public finances, restore confidence and put more money into working people’s pockets. Which only shows she hasn’t got a clue. In practice, it meant hiking taxes to fresh all-time highs, burying business in red tape, driving wealth creators overseas, and blowing a fortune on welfare, weakening the incentive to work. The result? The economy barely grew in the second half of last year and ground to a halt in January. Unemployment has surged. Almost a million young people can’t find a job. We all feel poorer. That’s some plan, chancellor. Yet for a brief moment at the start of the year, Reeves looked like she might get lucky. As inflation eased, markets expected interest rates to fall. Lower borrowing costs would ease pressure on households and firms and revive the housing market. Her plan still wasn’t up to much, but the economic cycle was in her favour. Not anymore. Donald Trump’s war on Iran has blown it to pieces. Today, oil prices …

Rachel Reeves has plan for UK economy – you’re going to hate it | Personal Finance | Finance

Rachel Reeves has plan for UK economy – you’re going to hate it | Personal Finance | Finance

Published by Sam Flores

As the Middle East intensifies, with Iranian-funded Houthi rebels now targeting the Suez Canal, the risks are multiplying fast. Energy prices are surging with the Strait of Hormuz mostly blocked to tankers. Petrol, heating, gas and electricity prices will soar as a result. So will food bills, as oil is used to make fertiliser and feedstock. Even pharmaceuticals could be hit. Businesses face mounting costs, while households are already cutting back spending, the last thing the economy needs. There’s talk of blackouts and a return to a four-day working week if energy has to be rationed. Does any of that sound familiar? It should if you lived through the 1970s. Now we’re heading for a re-run of that decade of disaster. And potentially even worse. In 1973, Middle East turmoil triggered an energy shock. Oil prices quadrupled and the UK faced real shortages. Government ministers even prepared petrol ration books. Electricity was effectively rationed through the three-day week, with businesses forced to shut for part of the week. Inflation surged while growth stalled, which is …

What Causes Stagflation? | ZeroHedge

What Causes Stagflation? | ZeroHedge

Published by Jenni Sidey

Authored by Frank Shostak via The Mises Institute, In the late 1960’s Edmund Phelps and Milton Friedman challenged the popular view that there can be a sustainable trade-off between inflation and unemployment. In fact, over time, according to Friedman, expansionary central bank policies set the platform for lower economic growth and a higher rate of inflation (i.e., stagflation). A famous case of stagflation occurred during the 1974-75 period. In March 1975, industrial production fell by nearly 13 percent year-on-year while the yearly growth rate of the consumer price index (CPI) jumped to around 12 percent. Friedman’s Explanation of Stagflation Starting from a situation of equality between the current and the expected rate of inflation, the central bank decides to attempt to increase the economic growth rate by increasing the growth rate of money supply. As a result, a greater supply of money enters the economy and each individual now has more money at his disposal. According to Friedman, because of this increase, every individual is of the view that he has become wealthier. This raises the demand for goods …