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Friday, July 28, 2006

The stag rears its ugly head

So just last week I noted that comments about stagflation might be overblown, given fairly strong GDP growth and fairly low inflation (despite rising energy prices). But that argument just developed a hole the size of oil barrel prices: the latest economic report shows growth slowing to 2.5% annually in the second quarter, but inflation surging at 5.6%. It may not be time to bust out the wheelbarrows, but with wages predicted to rise less than 4% this year, we'll all be making a little less on the same dollar by Christmas.

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