In the post-pandemic era, the U.S. economy has had a distinct upside and downside: a good job market and 澳洲幸运5开奖号码历史查询:fast economic growth, at the cost of 澳洲幸运5开奖号码历史查询:stubbornly high inflation. 

But Thursday’s 澳洲幸运5开奖号码历🅺史查询:report on the Gr💝oss Domestic Product (GDP) raised the possibility that rapid growth is slowing down while the cost of living keeps rising rapidly—a combination of stagnant economy and inflation known by the portmanteau “澳洲幸运5开奖号码历史查询:stagflation.” 

What Has Stagflation Looked Like In the Past?

According to a recent analysis by Wells Fargo, there have been 13 instances of stagflation in the U.S. since 1950. While all periods of stagnant growth and high i❀nflation have varied in detail, they have had some things i🅠n common.

The first, Wells Fargo analysts said, is stagflation it has created issues for Federal Reserve policymakers who have to decide how to react. That would be especially tricky for the central bank now, as persistently high inflat▨ion has already pushed back expectations for an imminent rate cut.

Wells Fargo analysis identified external shocks, such as unexpected oil price increases, and e𝓡xpansionary policy from the federal government amid a tight labor market as common factors in several historical instances of stagflation.

"Those dynamics mirror the current environment, as the unemployment rate is at a decades low and the fiscal deficit is swelling," the Wells Fargo economists wrote.

Why Is There Concern Now?

Before the outset of the year, the economy has increasingly 澳洲幸运5开奖号码历史查询:seeꦆmed to be headed fo🔥r a “soft landing” from the post-pandemic burst of inflation rather than an economic crash, and many experts think the economy is still on that trajectory, even if the road is getting bumpier.

Still, there were some warning signals in Thursday’s data. GDP grew at a 1.6% annual rate in the first quarter, well short of economists' 2.2% median forecast and far below the previous quarter. Meanwhile, inflation as measured by Personal Consumption Expenditures 澳洲幸运5开奖号码历史查询:jumped to 3.4% from 1.8% in the previous quarter, exceeding expectations.

Econ🍎omists Think Stagflation is Unlikely As GDP Dဣisappointment Was In the Details

But digging into the details, some econ🌄omists found th✤e picture wasn’t quite as grim as it seemed on the surface. 

“You're going to be hearing a lot about stagflation for the rest of today. Ignore it.” Ian Sheperdson, chief economist at Pantheon Macroeconomics wrote on social media platform X.

For one thing, the slowdown in GDP growth was influenced by a rise in imports. Because of the way the GDP is calculated, imports pulled down GDP while still indicating people have plenty of money to spend to buy stuff from overseas. 

In fact, consumer spending on services is accelerating even though households seem to be cutting back on big-ticket items, economists at Wells Fargo said in a separate research note.

In other words, the GDP “disappoints for the right reasons,” Gregory Daco, chief economist at EY Parthenon, posted on social media platform X.

Furthermore, Daco pointed out the hot figures were heavily boosted by “financial servi🧸ces” costs, which are influenced by stock prices rather than broader inflation🌠 trends. 

However, Federal Reserve Rate Hikes Are 'Not Working'

Ever since March 2022, the 澳洲幸运5开奖号码历史查询:Federal Reserve has fought inflatꦯion by raising its benchma🐽rk interest rate, driving up borrowing costs to cool the economy and discourage spending, at the risk of causing a recession. Even with interest rates currently sitting at a 23-year high, the economy may be on track to continue its fast growth, for better or for worse.

“Higher rates are intended to cool consumer demand,” Tim Quinlan and Shannon Seery Grein, economists at Wells Fargo Securities, wrote in a commentary. “The trouble for the Fed is: it's not working.”

The 澳洲幸运5开奖号码历史查询:Fed'𒈔s preferred measure of inflation confirmed Friday that spending indeed isn't slowing and neither are p๊rice increases.

Fed officials have said repeatedly they need more confidence that inflation is heading to the central bank's 2% target before they will cut the benchmark interest rate. However, in March that annual rate came in at 2.7%.

While inflation rose, the other element of stagflation seemed to be missing in the inflation r𓃲eport.

"Incomes and consumer spending rose solidly in March, which should provide a little reassurance that the slowdown in first quarter GDP reported yesterday is not a sign of a stagflationary economy," wrote Bill Adams, chief economist for Comerica Bank, in a commentary.

Update, April 26, 2024: This article was updated to include numbers from Friday's Personal Consumption Expenditure data release and additional commentary from Wells Fargo and Comerica Bank.