Friday, November 16, 2007

Stagflation Lite?

Growth is set to slow as oil and food prices continue their climb—an unwelcome, familiar combination. But there are reasons to expect a gentler version this time around

From BusinessWeek:

There's a whiff of stagflation in the air. Not the 1970s disease, when a stagnant economy generated 9% unemployment and 12% inflation. What's shaping up now is a much milder case, with more danger of "stag-" than "-flation." Over the next few months, economic growth is set to grind down, perhaps abruptly, as the jobless rate rises. At the same time, overall inflation will be rising rapidly, thanks to the latest surge in oil prices and a speedup in already rising food costs. It's a nasty mix that could complicate Federal Reserve policymaking and leave investors wondering which way to turn....MORE