A pair of new economic reports have analysts worried that America is headed for “stagflation.”
The phenomenon of stagflation exists when economic growth slows but inflation remains where it is, and the U.S. economy is showing signs of “flipping from goldilocks to stagflation,” Bank of America global equity strategist Michael Hartnett told MarketWatch.
“Goldilocks,” by contrast, is the term for an economy growing steadily but not quickly enough to cause a rise in inflation.
Hartnett reported that, in the past year, consumer prices climbed by 3.2%, and that forecasts predict that rate of growth could reach 3.6% by June.
And it’s not just an American dilemma. Plans to lower interest rates are already being put on hold by central banks in several emerging markets.
Stagflation plagued the U.S. economy throughout the 1970s and early 1980s.