Economic experts: Current economic conditions don’t meet the definition of “stagflation”

Multiple economists and other experts have explained that stagflation includes periods of high inflation, high unemployment, and weak economic growth, with some noting that the current values for those measures do not match that typical definition, mostly by pointing to the continued low unemployment rate. 

Although the consumer price index has slightly risen recently to 3.5%, it is still far below its mid-2022 peak of 9.1%. The Federal Reserve’s preferred measure of inflation, the personal consumption expenditures index excluding food and energy is even lower, at 2.8%, and also drastically down from its 2022 peak of almost 7%. 

The most recent unemployment rate fell to 3.8%, and according to professional forecasters surveyed by the Federal Reserve Bank of Philadelphia, it is expected to average below 4% for the rest of this year. 

Finally, although GDP for the first quarter came in below expectations, it blew past expectations in preceding quarters and is still expected to grow at a healthy annualized rate of 2.5% this year.

• University of Michigan economics professor Justin Wolfers: “Stagflation refers to periods of rising unemployment and rising inflation.” On Threads, Wolfers posted a chart dating back to the 1960s to show that past periods of stagflation occurred when both inflation and unemployment rose together, which doesn’t match current conditions. [Threads, 4/30/24]
• Nobel Prize-winning economist Paul Krugman: “Stagflation, you say? NY Fed's estimate of underlying inflation is basically flat at 2.6 percent.” [Twitter/X, 4/29/24]
• Former Federal Reserve economist Claudia Sahm: “In 1970s/early 1980s … stagflation paired with high unemployment rates.” [Twitter/X, 11/7/23]
• A Federal Reserve Bank of St. Louis economist’s explanation of a possible stagflation scenario noted that it involves “a long, long time of high inflation and high unemployment.” An article from the St. Louis Fed noted that during “the last era of stagflation,” “the unemployment rate averaged 6%” and “average annual inflation was 6.5%.” [Federal Reserve Bank of St. Louis, 11/30/22]
• Macroeconomic policy experts from the Congressional Research Service defined stagflation as a combination of “high inflation and unemployment” and “high rates of both unemployment and inflation” in at least two reports. [Congressional Research Service, 6/28/22, 3/31/08]
• CNBC: According to Johns Hopkins economics professor Jonathan Wright, “stagflation is a term coined in the 1970s when there was simultaneous high inflation and economic stagnation or high unemployment.” [CNBC, 6/21/22]

Media are spreading stagflation fears

Several media outlets, including right-wing Fox News, are leaning on recent claims by Dimon that the U.S. economy looks like the economy during the 1970s when stagflation occurred. 

But Dimon has been wrong on the economy in recent years; he incorrectly predicted that a recession would take place last year (and is still claiming one could happen this year), and during the Trump administration he incorrectly predicted GDP growth would hit 4% annually (it never rose above 3% during the Trump years, which ended with a deep recession). 

Other media are spreading fears of stagflation without citing Dimon but are still wrong.

• Fortune: “JPMorgan’s Jamie Dimon can’t shake the worry America is headed for a repeat of 1970s-style stagflation.” [Fortune, 4/24/24]
• Fox Business host Stuart Varney covered Dimon’s worries about stagflation. Fox Business host Taylor Riggs added: “Let’s remind ourselves what stagflation is, right. Still high inflation but slowing growth,” omitting mention of unemployment. [Fox Business, Varney & Co., 4/24/24]
• CNN: “Fears about stagflation are mounting in the US. It’s every central banker’s worst nightmare.” CNN’s article stated, “Slowing economic growth combined with rising inflation is known as stagflation,” leaving out the need for high unemployment to meet the definition of stagflation. The CNN article also cited Dimon’s mention of economic conditions during the 1970s, which included stagflation. [CNN, 4/25/24]
• MarketWatch: “GDP report revives stagflation fears in the market, with growing risk of a Fed rate hike seen.” MarketWatch also incompletely defined stagflation as “a combination of elevated inflation and slowing economic growth.” [MarketWatch, 4/25/24]
• WSJ editorial: “A GDP Warning as Signs of Stagflation Appear.” The editorial similarly ignored the requirement of a high unemployment rate to define stagflation, writing, “Slower growth with rising prices is a sign of stagflation, a political killer.” [The Wall Street Journal, 4/25/24]
• Business Insider: “The US economy may be barrelling towards stagflation, an outcome worse than recession.” Like other outlets, Business Insider neglected to mention high unemployment as a key component to stagflation, writing that “sputtering growth and higher prices are the key ingredients for stagflation, which is characterized by economic listlessness and stubbornly elevated inflation over a prolonged period.” [Business Insider, 4/25/24]
• On Fox News' Hannity, former GOP presidential candidate Vivek Ramaswamy claimed there is currently stagflation. Ramaswamy said: “You, on one hand, see inflation ticking back up. On the other hand, GDP growth has flattened. There's a word for that — it's called stagflation. It’s what put Jimmy Carter out of the White House.” During the discussion, Fox displayed a graphic that read: “Bidenomics a disaster with U.S. on the verge of stagflation nightmare.” [Fox News, Hannity, 4/25/24]
• Andrew Ross Sorkin on MSNBC’s Morning Joe: “This is what you call stagflation.” Sorkin continued: “I hate to say that we’re there, but, you know, when you have a slowing economy, and at the same time you have increased prices, it’s not a great place to be.” [MSNBC, Morning Joe, 4/26/24]
• AP: “JPMorgan’s Dimon hopes for soft landing for US economy but says stagflation is a possible scenario.” [The Associated Press, 4/26/24]