David Frum has written an interesting (and alarming) piece today about what we may be in for. He starts the piece with a little trip down memory lane that was very familiar to me:
In the 1970s, it cost much more to print a menu than it does today. Restaurants did not change them often. When prices rose, they’d retain their old menu—but affix little stickers with the new, handwritten prices atop the previous ones. When prices rose especially rapidly, the stickers accumulated in stubby columns rising up from the menu. A bored child might scratch off all the stickers with a fingernail—and, like a young archaeologist, reveal a lost world.
The term that came into use to describe the era was stagflation: stagnation plus inflation. Until recently, it seemed a relic of the disco era, but the economic chaos of Donald Trump’s second presidency has resurfaced the old word. Stock markets are warning of a recession. Bond markets are anticipating inflation. Perhaps one market is wrong, or the other, or both. More likely, they portend the return of a half-forgotten nightmare.
From 1969 to 1982—just 13 years—the United States suffered four recessions. Three were severe. Two were both severe and protracted. Recoveries were comparatively feeble. Even during the recessions, prices kept rising.
The era’s economic turmoil unnerved Americans. Mass-market best sellers such as The Late Great Planet Earth prophesied the imminent end of the world in a biblical apocalypse. Americans absorbed a secular version of the end-of-the-world obsession from books such as The Limits to Growth, which claimed that humankind was overconsuming almost every natural resource and had no choice but to strictly ration the pitiful remains.
In his famous 1979 speech, which came to be known as the “malaise” address, President Jimmy Carter warned: “The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.” Conversation everywhere, the historian Theodore White wrote, was “stained and drenched in money talk, by what it cost to live or what it cost to enjoy life.” Especially outside the upper classes, people “winced and ached. Some mysterious power was hollowing their hopes and dreams, their plans for a house or their children’s college education.” What could they do? How could they recover? “Faith in one’s own planning was dissolving—all across the nation,” White wrote. “The bedrock was heaving.”Trump’s tariffs are like a hundred self-inflicted oil shocks, all arriving at the same time.
The unease destabilized American politics. Carter lost his reelection bid in 1980; his predecessor, Gerald Ford, likewise had been voted out in 1976. Richard Nixon might well have survived Watergate (as Trump has survived his many scandals) had the investigation not unfolded during the most miserable American economy since the Great Depression. In House elections, the party of the president suffered unusually heavy losses: 49 seats in 1974; 26 in 1982.
Finally, the stagflation was choked to an end in the fourth and climactic recession of 1981–82. In late 1983 and ’84, the U.S. economy rebounded powerfully—and this time, the inflation did not return. Stagflation vanished into history. The economy has seen its share of tumult in the 21st century: the Great Recession, a recent bout of high inflation. But it’s been a very long time since Americans have felt recession and inflation at once.
This is why many of us of a certain age cringe a bit when we’re told that we had it so much better when we were young. As a member of a family that was anything but wealthy, that’s not how I remember it. I was young and resilient and, frankly, didn’t know any better, so it wasn’t something I thought too deeply about at the time. But the truth is that we didn’t have a lot of stuff or a lot of disposable income. We were fine but this idea that everyone was living a life of luxury and freedom is just wrong.
I’ve included a gift link to the whole article for you to read about why we might be facing another round of this and it’s depressing particularly since this time it’s entirely self-inflicted by Donald fucking Trump. We tried to warn them…