A word that many aging Baby Boomers and Generation-Xers dread hearing in relation to the U.S. economy is “stagflation,” which refers to a combination of high unemployment, soaring inflation, and low economic growth. In 1980, stagflation played a key role in President Jimmy Carter’s landslide loss to former California Gov. Ronald Reagan, who was also dogged by it during the first few years of his presidency.
In an article published by The Atlantic on April 25, Never Trump conservative and former George W. Bush speechwriter has a dire warning: stagflation, thanks to President Donald Trump’s economic policies, could make a raging comeback.
“The term that came into use to describe the era was stagflation: stagnation plus inflation,” Frum recalls. “Until recently, it seemed a relic of the disco era, but the economic chaos of Donald Trump’s second presidency has resurfaced the old word. Stock markets are warning of a recession. Bond markets are anticipating inflation. Perhaps one market is wrong, or the other, or both. More likely, they portend the return of a half-forgotten nightmare.”
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Frum adds, “From 1969 to 1982 — just 13 years — the United States suffered four recessions. Three were severe. Two were both severe and protracted. Recoveries were comparatively feeble. Even during the recessions, prices kept rising. The era’s economic turmoil unnerved Americans…. Finally, the stagflation was choked to an end in the fourth and climactic recession of 1981–82. In late 1983 and ’84, the U.S. economy rebounded powerfully — and this time, the inflation did not return. Stagflation vanished into history.”
Trump, Frum observes, “single-handedly plunged the economy into chaos” after former President Joe Biden left office. And his tariffs, according to Frum, “will not induce much factory-building” but are a recipe for both skyrocketing prices and a recession.
“Businesses will suffer diminished demand,” Frum warns. “Workers will be laid off. The only early hope is that the president who set the maelstrom going will panic and try to stop the wreckage. But he seems just as likely, perhaps more so, to make that damage worse.”
Frum’s article is generating a lot of discussion on X, formerly Twitter.
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Journalist Miriam Cosic said of Frum’s Atlantic article, “Essential reading, and not just in the US: ‘Trump’s tariffs could cause stagflation for the first time in decades. It may go on for a long, long time.'”
Retired physician Chuck Gartland commented, “I don’t think anyone in this administration gets what cross pacific traffic means. They are all stupid and the a——s that voted this all on us will not be alone in the resulting pain.”
Options trader Matthew Spira tweeted, “I try not even to argue with any Trumpers over the economy right now. I just say bookmark and let’s check back at the end of May.”
X user Bob Weeks noted, “Frum concludes that even if Trump reverses course, the damage to global trade networks and investor trust will linger. He argues that Trump’s fundamentally adversarial approach to both business and governance undermines the good faith necessary for economic stability, and that restoring global trust in the United States will be a long and difficult process. Ultimately, Trump’s actions have already inflicted deep and lasting harm on the U.S. and world economies. Frum presents a grim outlook, emphasizing that stagflation is not only devastating but also extremely difficult to escape once it takes hold.”
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David Frum’s full article for The Atlantic is available at this link (subscription required).
