Has Stagflation Returned?

The 1970s in the United States experienced stagflation, marked by sustained high inflation, low economic growth, and high unemployment. During this period, high oil prices and the Vietnam War were among the major factors driving persistent economic stagnation. Fast forward to 2026, and some economists are saying stagflation has returned, with striking parallels to the prior period nearly fifty years ago.

While inflation currently remains much lower than in the 1970s, it is still elevated above the Federal Reserve’s ideal target and higher than in the pre-COVID decade. However, as inflation has remained persistent, economic growth has slowed over the past five years.

Meanwhile, unemployment in the United States remains relatively steady near the Fed’s target rate, but has seen several surprising drops over the past year. Thus, are we seeing the return of stagflation? Maybe, but as of now, it appears that stagflation has not yet fully materialized. Still, yellow warning lights are flashing for an economy already strained, with conditions exacerbated by persistently high oil prices. 

For everyday Americans, the question of whether stagflation has arrived is moot. The stock market has been detached from their reality for at least a year now, with record returns not aligning with the economic realities that normal workers face, as wage growth remains stunted, inflation continues to climb, and job prospects remain uncertain amid AI-driven layoffs.

During times of economic uncertainty like the present, everyday Americans should, when feasible, bolster their emergency savings, cut unnecessary expenses, and keep their job prospects open should a layoff occur. For those nearing retirement, it is essential to manage nonessential expenses while updating investment portfolio allocations to help them weather turbulence should the current situation lead to a recession.

If you are unsure where to start with updating your budget, bolstering your savings, or realigning your portfolio to match your current needs, we are here to help.

At Lundeen Abrams Advisors, we have helped our clients weather economic uncertainty many times over, and we look forward to helping you do the same. So, please give us a call today to schedule an appointment, and we will look forward to helping you soon.