During the “Great Inflation” of the 1970s the term “stagflation” — economic stagnation combined with intense inflation — came into use as the destruction of the Bretton Woods monetary system beat down real growth in the trans-Atlantic economies. “Stagflation” is being heard again now. The allegedly extraordinary U.S. “economic growth” which was being celebrated as world-beating in the first half of the year, appears to be going down the drain. There are several indicators. The Atlanta Federal Reserve Bank, which maintains a GDP “tracker” forecast known as GDP Now, has been making the following estimates of economic growth in the third quarter: +14% in May, when it was just a forward guess; 6% in mid-August, when it was tracking reports on a half-finished quarter; +1.2% on Oct. 15, when gathering reports after the end of the quarter; and +0.2 on Oct. 27. Just one estimate, but then there is the drop in U.S. exports by 4.7% in September, sending the U.S. trade deficit to a huge $96.1 billion.
Then, this morning, the Commerce Department issued its own first “official” estimate of third-quarter GDP growth, at 2%. Further revisions in November and December will likely take this down further.
