Economist Peter Schiff has warned that the U.S. economy is facing stagflation and the situation is going to get worse. “Not only is the economy weakening, but inflation is strengthening,” he stressed, emphasizing: “You have the worst of both worlds.”
U.S. Economy and Stagflation
Economist and gold bug Peter Schiff warned about the U.S. economy facing a period of stagflation, characterized by high inflation and high unemployment, in an interview with Fox News Thursday. Schiff explained:
In Q1 of this year, inflation actually strengthened over the fourth quarter of last year. So, not only is the economy weakening, but inflation is strengthening. You have the worst of both worlds. This is stagflation and it’s going to get worse.
Commenting on Nobel laureate Paul Krugman’s opinion piece, published by the New York Times last week, stating that the U.S. economy is in better shape than most people realize and that “America has experienced a remarkably fast and essentially complete job market recovery,” Schiff argued: “If you look at the jobs that have been created, they are low-paying service sector jobs.”
Schiff added: “So what’s happened during the Biden presidency is people have lost good jobs — high-paying jobs with benefits — and they’ve been forced to replace them with two or three low-paying part-time jobs. That’s where all the jobs are coming from. That’s what the numbers show. The only reason we’re creating jobs is because we’re destroying so many good jobs, and you need to cobble together two or three part-time jobs to try to replace your lost income.” The gold bug also disagreed with Krugman’s view that inflation has “subsided substantially” and the overall situation is “not so bad.”
Multiple people, besides Schiff, have warned about stagflation in the U.S. economy. Former U.S. Treasury Secretary Larry Summers told Bloomberg Saturday that “We’ve got a bit of a stagflationary problem developing.” Quincy Krosby, the chief global strategist for LPL Financial, said last week: “Financial markets continue to doubt Jerome Powell’s resolve in restoring price stability despite his steadfast position that the Fed must not allow 1970s style stagflation take hold with pauses between rate hikes.”
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