Posted on 04/11/2022 11:11:13 AM PDT by bitt
In an alert to clients this week Bank of America strategists warned in blunt language: "'Inflation shock' worsening, 'rates shock' just beginning, 'recession shock' coming."
Why it matters: The ultra-tight job market and high inflation are two sides of the same coin, Axios chief economic correspondent Neil Irwin notes.
The super tight-job market is fueling higher wages and strong demand — which is why the Fed is going to have to move more aggressively than it has in decades to try to quash inflation. Driving the news: The recession calls are about what might happen later this year or in 2023 — not a comment about current conditions.
A "Zeitgeist" section added these snappy client quotes: "can't make my mind up if it's recession or stagflation" and "recession now soooo consensus." Deutsche Bank also warned of a downturn, saying in a research note on Tuesday that "we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession," per CNN. The bottom line: The risk is that the cost of that inflation-fighting campaign is a recession.
Editor's note: This article has been updated to include Deutsche Bank's recession call.
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This is for Russians? Right?
The difference between inflation and stagflation is productivity. Stagflation is inflation with a stagnant economy. Normally you can tell by the stock market. If companies that have no raw material costs go up in value. Then stock prices go up. Clearly, stocks that depend on large employee pools and lots of raw material will not benefit from higher prices. So there stocks will fall or remain stagnant.
For the whole decade of the 70s plus a few months before and after, the market bounced between 780 and 1005. It did not move. That’s because inflation ate the profits and companies did not increase in value.
Bring it on.
Bushes.
JFK
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