As a measure of our global economic angst this is certainly striking. Credit Suisse have done some research looking at the incidence of the terms “stagflation” and “recession” in news stories.
Their results suggest mounting anxieties on the former, while recession fever has yet to take hold.
The data covers articles in the FT, Wall Street Journal and the Economist. The chart inevitably comes with the odd health warning. The last data point only looks at the month of November, versus full years figures for the preceding periods. There’s nothing to say that there haven’t been pronounced but short-lived periods of stagflation angst in the preceding periods – or indeed that on average this year won’t turn out to be on trend.
But the concern is, says Credit Suisse, that stagflation fears become overblown with investors and central banks overly focused on headline inflation. Their bet is that the MPC will move to cut rates, but that the ECB will prove more intractable.
The other more general problem here was widely discussed when everyone was talking about Goldilocks at the back end of last year – the notion that the economy was not too hot, not too cold but just right. These measures don’t look at the context in which the term is used - including, say, Goldilocks/stagflation mentions as part of ponderings on the merits of using their occurrence as an indicator.
But then the Goldilocks philosophy holds that a spike in usage presages a reversal in stock market fortunes. And the economic porridge in the US at least is now looking distinctly unpalatable.