Stagflationary collision
Updated
What it is
Stagflation is the well-established economic term — coined by UK politician Iain Macleod in a 1965 House of Commons speech as a portmanteau of 'stagnation' and 'inflation' — for the simultaneous occurrence of high inflation, weak growth, and rising unemployment. AA's 'stagflationary collision' framing refers to exactly this bind when it is driven by a supply shock rather than excess demand.
Why it matters lately
By mid-2026 the US economy was showing classic stagflation symptoms: job growth averaged just roughly 68,000 per month in Q1 2026 even as headline inflation climbed toward its highest levels since 2023, driven by the Iran war's energy and food-supply disruption. Rather than cutting into the labor-market weakness, the Fed under Chair Kevin Warsh instead raised rates on September 16, 2026, to 3.75-4.00% explicitly citing the energy shock's inflationary pressure — the textbook stagflation policy bind playing out in real time.
Asymmetric Analytics view
Inference (AA): A Fed hiking into weak job growth because of supply-driven inflation is the operational definition of the stagflationary collision this graph is built to track.