Stagflation, the worst possible outcome for one’s economy, has been acknowledged by the BoE’s Mervyn King for the UK as he said today, “The recent pattern of revisions to the projections over the next yr, downward to growth and upward to inflation, has continued.” He believes that “if utility prices rise further later in the year, inflation will reach 5%.” This, as the BoE has their benchmark rate at .5%. This points to the problem with other central banks (ours) that the further you ease policy, the more difficult it is to get out and with the recent moderation in US economic growth, I’m afraid stagflation here is beginning to peek its head. Germany’s final Apr CPI rose 2.7% y/o/y, the most since Sept ’08 and .1% higher than expected. Chinese Apr CPI rose 5.3% y/o/y, also .1% above estimates. PPI was a touch below forecasts but still rose 6.8%. Chinese bank loans totaled 40b yuan higher than expected but IP and Retail Sales were a touch light. Net, net with China, the Shanghai index responded with a .3% drop. In the US, spurred on by a 5 month low in mortgage rates, the MBA said refi’s rose 9% and purchases were up 6.7%. II: Bulls 51.1 v 54.9 Bears 16.5 v 18.5

Category: MacroNotes

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3 Responses to “Stagflation in the UK, us next?”

  1. KJ Foehr says:

    Stagflation is not the worst possible outcome for an economy; deflationary recession is.

    We will be lucky if we can get through the next several quarters with very low, but positive growth and moderate inflation. This would provide stable to slightly rising employment as opposed to deflation which would result in higher unemployment and lower corporate profits, imo.

  2. davossherman@gmail.com says:

    With Bennie (@$$face moron Bernanke) & the ink jets?

    Come on!

    “Nations are not ruined by one act of violence, but gradually and in an almost imperceptible manner by the depreciation of their circulating currency, through excessive quantity…”

    –Nicholas Copernicus – 1525

  3. ricecake says:

    They call UKUSA. Stagflation defy the union.

    Everything is up! Consumer goods from China and other oversea manufacturers are up. Food is up. Gas is up. Toilet paper is up. Clothes are up. Rent is up (although housing prices in some but not area are down. Hell they were so stupid to build so many houses in nowhere. Called very bad ass investment.) Tuition is up. Insurance fee is up. Medications are up.

    What’s down? Certain end products of all those red hot commodities are down. Like again, some houses in mislocations. And the outdated no one wants digital gadgets are cheaper. But who need them? They are the developed nations’ trash that will dump over to India and other under developing world.

    Mankind are so stupid.