Paul R. La Monica,
Aug 19, 2011
Is that a disco ball I see?
Stocks plunged Thursday  after several economic reports in the United States raised more worries about stagnant growth and higher inflation.
I wish there was a word to describe such a scenario. Oh yeah. There is! Stagflation. Remember that old chestnut from the 1970s? Gas lines and what not? Good times. Or not.
Weekly initial jobless claims rose again  and were back above 400,000. There’s the “stag.” And the Consumer Price Index rose at a much higher than expected rate in July. That follows a similarly strong Producer Price Index number Wednesday. Ladies and gentlemen, there’s your “flation.”
What are investors worried more about? If you look beyond the latest carnage in stocks Thursday, investors are clearly sending a signal that they are worried both about stagnation and inflation. But the emphasis seems to be more on the “stag.”