Wednesday, January 02, 2008

More Evidence of Stagflation in America

The ISM manufacturing index fell to 47.7 in December-the lowest level since April 2003. The details are even more bearish. The new orders subcomponent fell to just 45.7-the lowest since 2001 recession. The production subcomponent also fell sharply and is now well below 50. The only indicator that rose and is at a high level was "prices paid"-an inflation indicator. This again confirms my long held view that America's economy is falling into stagflation.

Meanwhile, oil prices just keeps rising which will further depress growth and increase inflation, i.e. make the economy more stagflationary.


Blogger Precog said...


I'd be curious to hear your opinion regarding the stagflation/deflation debate. There is a particularly interesting thread here

1:25 AM  
Blogger stefankarlsson said...

I'll get back later for a more extensive analysis, but suffice to say for now that I disagree with Mike Shedlock, whose foolish embrace of Shostak's money supply definition has made him clueless on the inflation issue.

Here is Murray Rothbard replying to a similar argumment as Shedlock's regarding the alleged inability of the Fed to inflate.
the alleged inability of the Fed to inflate

12:35 PM  

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