Is a mild stagflation coming?

That is the topic of my latest article for The Free Press.  The general picture is not altogether encouraging:

How about unemployment?

The labor market has been deteriorating, albeit slowly, since the waning days of the Biden administration. Indeed, for the first time since 2021, there are more unemployed Americans than there are open jobs.

Economists can only guess as to why this is happening. Some like to argue that labor markets are “taking a pause” or have “run out of steam,” two metaphors that may hold some truth but should not be mistaken for well-reasoned explanations. Another popular hypothesis is that artificial intelligence has slowed new hiring. That may be true for some sectors, such as mid-tier tech programmers or call center workers, but it is unlikely to have a large enough effect to account for most of the recent labor market slowdown.

As the Bureau of Labor Statistics has revised job creation numbers, it has become increasingly clear that the American economy has not been creating many new jobs for some time. For instance, revised numbers show that between April 2024 and March 2025, the economy generated 911,000 fewer jobs than the initial monthly calculations. Revisions to the June figures even showed a loss of 13,000 jobs. That is bad news in its own right, but it is also a negative harbinger for the future.

Once workers begin losing their jobs—and job creation weakens more generally—a kind of cumulative unraveling can take place. For instance, jobless workers have less money to spend, which decreases demand in the economy, and that usually translates into further job loss. Once the job loss dynamic is set in general motion, it can accelerate rapidly.

Uncertainty surrounding the Trump tariffs has also discouraged private sector investment, which weakens future job creation. So the best bet is that the economy, a year or two from now, will have noticeably higher unemployment.

Note that gdp growth might remain fine, so it will be a funny kind of stagflation…