What Stagflation Really Looks Like

This chart from Nomura illustrates one of the disturbing aspects of today’s ISM report.

While the overall index is flagging, the prices paid index (companies’ costs) is still jumping.

That’s a stagflationary datapoint.


Photo: Nomura

So how bad is that?

Well check this out: This chart is the prices paid line minus the overall line.


Photo: FRED

As you can see now, the gap is around nine points.

But go back before the last recession, and this isn’t that bad.

From 2002 to 2008, we regularly had readings where the prices paid index was over 20 points above the general index, and in early 2008 that peaked at over 40! When the number of companies reporting price increases are that far outstripping companies reporting overall growth, THAT’S stagflation.

We’re still nowhere really close.

Oh and here’s the chart going back further. Not surprisingly, the late ’70s was a banner period for stagflation.


Photo: FRED

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