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Comment by flunhat | Hacker News Reader

But isn't stagflation defined as high unemployment + high inflation? Whereas now we have low unemployment -- to the point of labor shortages -- and high inflation, i.e. an economy that is not in a recession.

In other words, we have an economy running too hot, and raising interest rates will slow that (by how much is another question...)

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Do we actually have high employment at the moment?

The way I understand the current situation, one one hand there was a lot of covid money and on the other hand a lot of people were fired by their companies during covid. This in turn made them unwilling to go back and work the same job, on the same salary as before, for a company which preferred to cater to their profits than to their employees.

It's true that companies are having a hard time finding employees. And it's also true that fewer people are in the workforce than before, largely due to retirements. So that paints a picture of an economy where there are plenty of jobs available and not enough people to work them, which is low unemployment.

But high employment seems a little different to me than just low unemployment, just because my read is that there's fewer people working in general than before the pandemic (IIRC). [1][2]

[1] https://www.uschamber.com/workforce/understanding-americas-l... [2] https://www.fitchratings.com/research/sovereigns/fittch-rati...

It seems like we have high employment but unemployment rate is being ravaged by Goodhart's Law after being such an important needle for politicians and the Fed itself. It doesn't seem like many of the employment options are good, but in order to keep unemployment down we have coerced our institutions to create low quality high quantity jobs.

The more relevant variable isn't employment rate but GDP. We have a shrinking GDP which is the definition of a recession.

Shrinking GDP over a sustained period of time would be more accurate. GDP has decreased in past quarters even when there wasn't a recession, most recently in 2014.

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