{"id":128438,"date":"2025-09-03T00:25:07","date_gmt":"2025-09-03T00:25:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/128438\/"},"modified":"2025-09-03T00:25:07","modified_gmt":"2025-09-03T00:25:07","slug":"top-economist-torsten-slok-warns-of-an-inflation-mountain-in-a-potential-repeat-of-the-70s","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/128438\/","title":{"rendered":"Top economist Torsten Slok warns of an \u2018inflation mountain\u2019 in a potential repeat of the \u201970s"},"content":{"rendered":"\n

Torsten Slok has been turning heads on Wall Street with his charts for years, since he was at Deutsche Bank<\/a> and continuing on into his current role at Apollo Global Management<\/a>. His market analysis earned him a profile in Bloomberg<\/a>, and he was one of the first prominent voices to warn of a potential AI bubble in stocks<\/a> in the summer of 2025.<\/p>\n<\/p>\n

Now he sees an uncanny resemblance\u2014almost an uncanny valley\u2014between the inflation mountain range of the 1970s and \u201980s and the inflation wave of 2021, plus what may lie ahead for the U.S. economy. In his Daily Spark newsletter on Aug. 31, Slok noted the upside pressure on inflation and inflation expectations from tariffs; dollar depreciation; and growing disagreement within the Federal Open Market Committee about how to balance rising inflation with slowing employment. (In a note titled \u201cGhosts of 2007<\/a>,\u201d Bank of America<\/a> Research observed that the Fed has rarely cut rates against a backdrop of rising inflation.)<\/p>\n

\u201cThe risks are rising,\u201d Slok added, \u201cthat we could see another \u2018inflation mountain\u2019 emerge over the coming months.\u201d<\/p>\n

The chart shared by Slok and Apollo juxtaposes the current path of U.S. core CPI with inflation periods from 1974 to 1982, illustrating a close similarity between the inflation wave of 1973\u201374 with that of 2021\u201322. As Slok\u2019s arrows demonstrate, the first \u201cinflation mountain\u201d of the 1970s was followed by another, taking off around 1978. If the pattern holds, the economy would be due to scale another peak starting almost exactly in the fall of 2025.<\/p>\n

Although Slok doesn\u2019t say this in his note, the \u201cfirst inflation mountain\u201d refers to the initial spike, while the \u201csecond mountain\u201d represents the even steeper climb that followed several years later, driven by external shocks and policy missteps.<\/p>\n

These aren\u2019t the first warnings on inflation from Slok. In late August, he argued that Jerome Powell\u2019s choice of words at the Jackson Hole Symposium\u2014saying the labor market is in a \u201ccurious kind of balance\u201d\u2014showed that the Fed sees structural distortions from tariffs and immigration policy. If those forces keep inflation sticky and Powell cuts rates, as he\u2019s under pressure from the White House to do, Slok wrote that he could be vulnerable to a 1970s-style \u201cstop-go<\/a>\u201d policy mistake\u2014the backdrop for the second inflation mountain.<\/p>\n

In such a scenario, reminiscent of the \u201870s, if the Fed loosens policy prematurely, inflation could spike, leading to the painful corrective measures seen under Powell\u2019s predecessor Paul Volcker<\/a>, who hiked rates aggressively and weathered severe, double-dip recessions.<\/p>\n

Story Continues <\/p>\n

The most recent inflation read, the personal consumption expenditures index, showed prices rising 2.6% in July compared with a year ago,<\/a> the same annual increase as in June and in line with what economists expected. Excluding the more volatile food and energy categories, prices rose 2.9%, up from 2.8% in June and the highest since February, with Fortune\u2019s Eva Roytburg reporting<\/a> that there was a pullback in spending in discretionary categories. The broader consumer price index was flatter than expected<\/a> at 2.7%, while the producer price index was higher than expected<\/a> as wholesale prices rose 3.3%, both over the same period.<\/p>\n

These warnings come as economists debate the shape of the back half of the 2020s, questioning whether a recession is ahead or the \u201cstagflation\u201d that accompanied the inflation mountains of Slok\u2019s analysis. UBS sees an elevated recession risk in the U.S. economy\u2019s hard data, coming in at 93% in July\u2014although its average recession risk is much lower given its proprietary analysis of other conditions. Still, it forecasts a \u201csoggy\u201d economy ahead, much like Bank of America Research<\/a>.<\/p>\n

JPMorgan was alarmed<\/a> by July\u2019s shockingly soft jobs report, saying that a slide in labor demand of the magnitude shown \u201cis a recession warning signal.\u201d Meanwhile, Mark Zandi, chief economist for Moody\u2019s Analytics, warned in early August<\/a> the U.S. was on the precipice of a recession, citing much of the same hard data as UBS. More recently, Zandi has put the odds of a recession at 50-50<\/a>, and he\u2019s said that states representing almost one-third of GDP were either in recession already or at risk of it<\/a>. Slok\u2019s analysis poses the question: What happens if and when that slams into an inflation mountain?<\/p>\n

This story was originally featured on Fortune.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Torsten Slok has been turning heads on Wall Street with his charts for years, since he was at…\n","protected":false},"author":2,"featured_media":128439,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[81622,28,81620,101,37614,81621,81624,17303,81623,19076],"class_list":["post-128438","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-apollo-global-management","tag-business","tag-deutsche-bank","tag-economy","tag-federal-open-market-committee","tag-inflation-expectations","tag-inflation-fears","tag-market-analysis","tag-mountain-range","tag-torsten-slok"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/128438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=128438"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/128438\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/128439"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=128438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=128438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=128438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}