Why stagflation may not be the biggest threat to the economy right now

Despite Fed warnings, stagflation risks may be overblown.

Transcript

00:00You know, we've only seen one specific time in history where stagflation was a huge, huge

00:06problem. And so, you know, of course, Powell pointing to the concern of stagflation is a very

00:12big, scary thing and certainly something the Fed should be watching out for. I don't know if we're

00:19seeing all the signs of stagflation yet. I certainly wouldn't go that far. I actually see a lot of

00:26concern in the marketplace. You know, we've seen the consumer sentiment and consumer confidence

00:31numbers come down further and further. They've slidden and slidden since the beginning of the

00:35year. I think one measure was Americans are expecting more and more unemployment at the

00:42highest expected rate since 2009. Now, that hasn't borne out in the labor numbers yet, but that speaks

00:49to the uncertainty the average American has. And so, you know, does that say stagflation to me?

00:55Not necessarily. Obviously, all the tariff stuff could cause rising prices if those tariffs don't,

01:03you know, come to fruition, though that might be a reprieve. I do think Powell getting the criticism

01:10of Mr. Too Late, as it were, is sort of an earned criticism. I think a lot of, you know, economists

01:17would point to how late the Fed started rate hikes and properly point out that he took too long.

01:24And the Fed has, of course, noted inflation and the labor numbers that they're watching. But they've

01:30also spoken about liquidity quite a bit and their focus on liquidity. I think when we look at liquidity,

01:38we look at that subprime category for lending quite a bit. And we compare that to, you know, where credit

01:45wants are. And when we see that start to widen further and further, that starts to say that those on the

01:53lower end of the economic totem pole, as it were, don't have that liquidity. And that's something

01:58the Fed should watch too.