Stagflation - Many now think it's coming, so let's start with the definition from Oxford Languages: Persistent high inflation combined with high unemployment and stagnant demand in a country's economy. 1/

With the CPI flat at 1.2% YoY the economy is not experiencing "persistent high inflation." Since Aug 2018, the YoY% of the CPI has been trending lower, not higher, indicating persistent deflation. 2/

With nearly 20 million Americans on some form of unemployment benefit and more likely to file over the winter months, high unemployment will be a problem that is unlikely to go away soon, even with a vaccine. 3/

It's also hard to argue there is "stagnant demand in a country's economy" when retail sales posted its highest print in history and is running at a near-cycle high at 8.5% YoY. 4/

To get stagflation, consumer prices will need to skyrocket against falling demand. Businesses will not be able to pass on higher prices with weaker demand, meaning consumer prices will fall if demand falls. 5/

I just don't see stagflation as a likely outcome since consumer prices will fall with demand as businesses are forced to lower prices to entice consumers to spend. /fin