'A hint of 1967': 4 reasons the US could soon see an inflation spike similar to the last stagflation crisis

Core Viewpoint - TS Lombard is monitoring the potential for a stagflation scenario in the US economy, reminiscent of the 1970s, despite most forecasters being optimistic about economic resilience [1][2][6] Economic Conditions - Stagflation is characterized by economic slowdown coupled with high inflation, posing a greater challenge for policymakers compared to typical recessions [2] - Recent inflation data has been relatively tame, and economic growth has been strong, leading most forecasters to consider stagflation a fringe risk [2] Federal Reserve Actions - The Federal Reserve has restarted its rate-cutting cycle, which could be a misstep according to TS Lombard, as concerns about the labor market may be overstated [3][4] - Historical context is provided, indicating that the Fed's previous rate cuts in the late 1960s preceded a spike in inflation [4][6] Demand Dynamics - TS Lombard identifies four factors that could lead to a re-acceleration of demand in 2026, potentially increasing consumer prices: 1. Pent-up Demand: As uncertainties around tariffs and the job market diminish, consumer spending may increase [5] 2. Fed Easing: Looser monetary policy is expected to quickly impact sensitive sectors like housing and consumer goods, with new home sales rising by 20% in August [5] 3. Other Central Banks Easing: Many central banks have been cutting rates, which could stimulate global growth in 2026 [7] 4. Fiscal Stimulus: Policies from the Trump administration and other countries, such as Germany and China, are anticipated to boost demand [7][8]