Inflation returned to the market’s collective consciousness this week, as detailed in the April report on consumer prices. But yesterday came more signs that an economic slowdown may in the offing as well, by way of the Conference Board’s index of leading indicators and a surge in jobless claims for last week.
Adding to the perception that a downshift in growth is taking root are fresh comments from Fed Chairman Ben Bernanke, who yesterday observed that the real estate market is cooling. “It looks to be a very orderly and moderate kind of cooling at this point,” he explained via CNNMoney.com, but a cooling nonetheless.
It’s no secret that some dismal scientists have been predicting a softening in the economy’s momentum for the second half of this year and beyond. That view has been under pressure of late thanks to a string of economic reports that suggest the economy’s still bubbling. But yesterday’s numbers give a bit more credence to the forces of pessimism.
If a slowdown is coming, it may arrive just as inflationary pressures are gaining momentum. In that case, does that mean that stagflation is just around the corner?