https://www.politico.com/news/magazine/2025/04/04/trump-stagflation-presidents-history-00270981This Economic Paradox Nearly Took Down Three Presidents. Is Donald Trump Next?...."What made Ford, Carter and Reagan so similar was that stagflation was a problem that was visited upon them, owing largely to exogenous or structural developments they had scant ability to control. Trump’s looming stagflation crisis, on the other hand, is one of his own making. The public was hard enough on past presidents who failed to fix the problem. Time will tell how just harshly voters will appraise Trump for potentially creating it.
Through aggressive tariffs and extreme cuts to the government workforce — as well as health, science and social service funding — Trump’s policies threaten to directly increase production costs and consumer prices, fueling inflation and almost guaranteeing that the Federal Reserve Board will keep interest rates high. Additionally, the resulting economic uncertainty discourages business investments and disrupts supply chains, which can stifle economic growth, setting the stage for higher unemployment.
Why would anyone elect to do this? Trump maintains that, contrary to what most economists believe, it will reinvigorate American industry in his nationalist vision. But those around the president would do well to brush up on their 1970s history. It isn’t pretty. "
Comments
During that stagflation era, the S&P 500 was a net loser. Here's one "investment research" guy's piece on what worked and what didn't during that time; for stocks, "Overall, the 1970s was a lost decade for stock investors." Winners were Big Oil, commodities generally, real estate, precious metals, and some of the typical value stocks.
Of course there's no guarantee that things would line up the same way now.
This is what economist nobel prize Krugman said (https://www.politico.com/story/2016/11/krugman-trump-global-recession-2016-231055)
370 economists said the following in 11/2016 too
(https://www.cnbc.com/2016/11/01/370-top-economists-publish-scathing-letter-against-dangerous-destructive-trump.html)
Nice article, but no solutions in sight.
How many presidents/Gov promised to cut Gov spending and employees and make commerce fairer for Americans? Plenty, and none delivered.
The closest one for generic solutions in my lifetime was Clinton, and why I voted twice for him. It can be done if both parties negotiate it and come up with compromise solutions. It's gone a long time ago, both parties and their supporters would not compromise.
Obama initiated Bowles-Simson. The results were good, IMO. Obama shelved it. Read (https://en.wikipedia.org/wiki/National_Commission_on_Fiscal_Responsibility_and_Reform)
Angry posts will not change it.
IG Corporate Bonds now paying 5-6% over10-20 years, callable though.
Fun fact. In May 2007, height of market back then, I bought my retirement home putting 20% down and took a 30-year fixed mortgage paying 6.5%! So, I think years of ZIRP since have probably distorted my perspective on rates.
Instead, we witness a butcher's plan - to force a sweeping movement all at once. Jam it out there. Reciprocal tariff rates range from 10% to 50%, with Asia getting the worst of it. Even an island inhabited mainly by penguins was included.
Thus far, China, Canada and Mexico have all responded with retaliation tariffs. The EU will respond this week.
There are not many positive scenarios for how this plays out. US factories cannot magically pick up the slack overnight, raw materials will still need to be imported, there will be supply chain issues galore, there will be inflation (rising prices), there could be jobs lost as a result, some countries will seek new trade partners, etc.
If a plan is well thought out and strategically delivered, it has a better chance to succeed. This one reads like a hatchet job based on 1 individual's pet project. There is a reason why he was attached to 6 bankruptcies.
This will simply be his largest one.
Right now the FED is in a tight spot when the inflation remains elevated and getting worse. Watch for the labor market where recession starts.
Is it economically feasible to reshoring manufacturing base to the States? Interesting but naive thinking in my honest opinion.
@JD_co, the tariffs is more revealing that meets the eyes. Excerpt from WSJ article. For Apple News subscribers, here is the link.
https://apple.news/AP0d-np1rQOSoanLTvSkaVQ
BOTH columns of data on the buffoon's tariffs plaque are materially wrong. (What a shock!)
CNBC's Liesman exposed the material errors in the other country's column last Friday and Fmr DAL Fed Chair attested to his statements, stating,
"Well, I know the Vietnam one is wrong because I negotiated it!"
Our reciprocal tariffs use a flawed formula that only includes goods, and of course the significantly incorrect data in the other country's column.
As a retired bean counter, or as anyone who finished elementary school math, how can you do anything further with this pile of crap until you admit you f*cked up the math and conduct a Do Over? (See Billy Crystal in City Slickers.)
in light of President Trump's recent comments urging Jerome Powell to:
"CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Some here may be interested in the findings.
Richard Nixon demanded and Arthur Burns supplied an expansionary mon-
etary policy and a growing economy in the run-up to the 1972 election. (page 178)
Thus, a monetary stimulus helped to boost the economy in time for the 1972
election, helping to deliver Nixon’s landslide victory. However, the excessive ag-
gregate demand stimulation prior to the election created serious problems for the
economy that took nearly a decade to resolve. (page 179)
Regardless of the ultimate source of Arthur Burns’s motivation, his actions as
Federal Reserve chair helped to trigger an extremely costly inflationary boom– bust
cycle. By Election Day in 1972, the Fed had already started its monetary tightening.
The federal funds rate had risen from 4.49 percent in July 1972 to 5.06 percent by
Election Day. As Nixon had told Burns in February 1972, “I really don’t care what
you do in [or after] April.” One year after the election, in November 1973, the
Federal Reserve had hit the monetary policy brakes in earnest. In the year since the
November 1972 election, the discount rate had been increased from 4.5 percent in
July 1972 to 7.5 percent. The federal funds rate, which had been 4.49 percent in
July 1972, jumped to 9.71 percent. But the civilian unemployment rate, as usual a
lagging indicator, continued to plummet, falling to 4.8 percent in November 1973.
The Nixon–Burns boom– bust cycle was underway. (page 187)
The eventual elimination of wage and price controls in 1973 and the exces-
sively aggressive monetary policy of 1971–72 produced an inflationary boom. The
inflation rate measured by the change in the Consumer Price Index for 1973 was
9.6 percent (as shown in Table 3). In response to the post-election Federal Reserve
tightening, the economy swung into a recession in November 1973, one year after
the election. The recession lasted until March 1975, but even this recession was
insufficient to stop inflationary pressures. The inflation rate for 1975 was
6.7 percent— higher than the rate that precipitated the earlier wage and price
controls. It was not until Paul Volcker became chairman of the Federal Reserve in
1979 and the 1980 – 82 recessions occurred that inflation was finally brought under
control. During those recessions, the federal funds rate hit a record 15.61 percent
(weekly average) and the unemployment rate rose to over 10 percent for ten
months. Inflation was finally defeated, but at huge economic cost. (page 187)
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.20.4.177
Similarly, the concept of “fairness” in trade requires better than using some nonsensical formula drafted by ChatGPT to create tariff rates which have no basis in the real world and which assume we operate in a 19th century commodity and goods-based economy, totally ignoring the impact of how much in services the US sells to the rest of the world.