1970s-style stagflation may be at risk of repeating itself

A major Wall Street bank is warning about the risk that inflation expectations could become unanchored in a fashion similar to the 1970s stagflation era.

  • Weekend attacks on Israel by Hamas illustrate how geopolitical risks can suddenly return — adding to the surprise shocks of the current decade, such as the COVID-19 pandemic and Russia’s invasion of Ukraine.

Oil prices settled more than 4% higher on Monday as traders weighed the impact of the war in the Middle East on crude supplies.

  • The spike in energy prices is adding to the growing list of similarities to the 1970s era — which also includes consistently above-target inflation across major economies and repeated optimism.
  • Worker strikes and even increasing chances that this winter will be dominated by the 💨 El Niño weather pattern are also similar to what took place in 1971.

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