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<\/p>\n Email Link<\/p>\n \n A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free here<\/a>.\n<\/p>\n New York \n Two key reports<\/a> released Thursday showed the US economy may be in a state of early-onset stagflation \u2014 a toxic one-two punch of slow economic growth and rising prices.\n <\/p>\n \n That\u2019s a particularly problematic combo because slow economic growth should, in normal times, drag prices down, not up. It\u2019s Econ 101: When people are out of work or worried about losing their jobs, they spend less, spurring businesses to lower prices. If people can\u2019t afford things but prices go up anyway, that\u2019s a sign something is deeply broken.\n <\/p>\n \n See here:\n <\/p>\n Consumer prices rose 0.4% in August, driving the annualized inflation rate to 2.9% \u2014 the highest since January. That was up from 2.7% in July.<\/p>\n At the same time, first-time applications for unemployment benefits surged last week to their highest level in four years. An estimated 263,000 people filed initial unemployment insurance in the week ended September 6, according to Department of Labor data released Thursday.<\/p>\n \n \u201cThe whiff of stagflation is getting stronger,\u201d Harvard economics professor Jason Furman wrote on Bluesky<\/a> Thursday. \u201cThere are no good options for the Fed given the set of circumstances we\u2019re facing.\u201d\n <\/p>\n \n Let\u2019s step back.\n <\/p>\n \n \u201cStagflation\u201d is a portmanteau of stagnation and inflation, and it\u2019s a scary diagnosis<\/a> for an any economy.\n <\/p>\n \n Think about the inflationary era of 2022 \u2014 prices were high and rising faster than most Americans had ever experienced, which, to borrow a technical term, sucked. But there was a booming labor market underpinning that inflation. Wages (in aggregate) were rising and stimulus checks were still padding people\u2019s wallets, so the suck was a tad more manageable.\n <\/p>\n \n Take away the booming job market and you\u2019ve just got the suck of inflation piling onto the suck of rising unemployment. Double suck.\n <\/p>\n
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