The best economists of Torrestin Silok warns of “Jabal Al -Takhmaa” ​​in a possible repetition of “the 1970s

Now he sees a strange similarity – well in Wadi Gharib – between the inflation mountain range in the 1970s and 1980s and the inflation wave in 2021, in addition to what may await us for the American economy. He has Daily spark The newsletter on August 31, Slok noticed the bullish pressure on inflation and inflation forecasts from definitions; The decrease in the dollar and the growing dispute within the Federal Open Market Committee on how to balance the high inflation with the slowdown of employment. (In a note entitled “Ghosts 2007” Bank of America Research has noted that the Federal Reserve rarely reduced rates against the background of increased inflation.)

“The risks rise,” Slok added, where we can see another mountain “inflation” that appears in the coming months. “

Warning signs show

The Slok and Apollo chart plans to the current path of the US consumer price index with inflation periods from 1974 to 1982, which shows a close similarity between the inflation wave in 1973-1974 with 2021-22. As Sluk shows, the first “Mount of Inflation” was followed in the seventies of the last century, which was taken off in 1978. If the pattern continues, the economy will be the result of another peak that approximately in the fall of 2025.

Although Slok does not say this in its observation, the “first inflation mountain” indicates the initial height, while the “second mountain” represents the most slope aspect that followed after several years, driven by external shocks and political lines.

Fears of inflation escalate

These are not the first warnings of inflation from Slok. In late August, he argued that Jerome Powell’s choice of words at the Jackson Hall symposium – which occupies the labor market in “a kind of curious balance” – shows that the Federal Reserve sees structural distortions of customs tariffs and immigration policy. If these powers keep the larger inflation and Powell cuts rates, because it is under pressure from the White House to do, Slok wrote that it can be vulnerable to the 1970s.to stop“A mistake in politics – the background of the second mountain of inflation.

In such a scenario, it reminds us of the 1970s, if the policy of feeding the federal reserve is premature, the inflation can decline, which leads to the painful corrective measures that were seen under the ancestor of Powell Paul VolkerThose who raised the prices strongly and overcame a severe ride, dual DIP.

And the latest infection reading showed the personal consumption expenses index, Prices rise by 2.6 % in July compared to last year, The same annual increase as in June and in the ranks of what economists expected. With the exception of the most volatile food and energy categories, prices increased by 2.9 %, up from 2.8 % in June and the upper number of February, with luckEva Rewterberg reports There is a decline in spending in appreciation categories. The most widespread The consumer price index was more flatter than expected In 2.7 %, while The product price index was higher than expected Wholesale prices also increased 3.3 %, both during the same period.

These warnings come at a time when economists discuss the shape of the back of the twenties of the twentieth century, and they wonder whether the recession is in the foreground or the “stagnation” that accompanied the mountains of inflation in Slok analysis. UBS sees the risk of high recession in the difficult data of the American economy, reaching 93 % in July – although its average risk of recession is much lower given its own analysis of other conditions. However, the “Mendi” economy expects in the future, It is very similar to Bank of America’s research.

Jpmorgan was anxious By reporting the soft jobs in July, saying that a segment of demand for employment appears “is a stagnation warning.” Meanwhile, Mark Zandy, the chief economist of Moody’s analyzes, Be careful in early August The United States was on the edge of the recession, referring to a lot of the same solid data as UBS. Recently, Zandy has Put the possibility of recession at 50-50He said that the countries that represent nearly a third of GDP were either In the recession already or at risk. Slok analysis asks the question: What happens if and when is this turning in the mountain of inflation?

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