News Release

Stagflation

DOUG HENWOOD
Henwood is author of the book Wall Street and editor of Left Business Observer. He said today: “Stagflation, that vexing combination of stagnant economy and rising inflation, is back in the news for the first time since the 1970s. And it is a problem. But, unlike the stagflation of the 1970s, this time there’s no contribution from rising wages or militant labor. Wages are falling and labor is weak. The problem is commodity price inflation, which unfortunately is coming from real things, such as — in the case of energy — demand rising more quickly than supply, which creates a serious long-term conflict; and in the case of food, crop failures caused in part by climate change. ‘Drilling and deregulating,’ the Republican solution, is exactly the wrong approach to the problem, as would be raising interest rates, as some of the financial markets would like to see. We need a serious development of alternative energy sources and a rational food policy, neither of which can be accomplished overnight.”

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167