It Feels Like the 1970s. But Here’s Why This Decade Could Shape Up to Be Like the Roaring 20s.

Decades-high inflation, a hawkish Federal Reserve, and soaring energy prices seem to hearken back to the 1970s and the decade’s prolonged period of stagflation.

The higher-than-expected consumer price index, which rose 8.6% from a year earlier, dashed hopes on Friday that inflation had finally seen its peak. The reading also fueled concerns that the Fed will need to take an even more aggressive approach to curb spiraling prices, increasing the chances that the economy could fall into a recession over the next few months. 

“May’s CPI report convinced investors that the Fed remains well behind the inflation curve, which isn’t showing any significant signs of peaking yet,” wrote Ed Yardeni, president of Yardeni Research. 

Yardeni raised his odds of a mild recession to 45% from 40% on Monday. He also doubled down on his thesis that the remainder of the decade will turn out to be more like the 1920s than the 1970s, even as recent developments suggest the opposite.