(DCNF)—The U.S. economy is showing signs of stagflation as growth slumps down and prices continue to surge for average Americans, experts told the Daily Caller News Foundation.
U.S. annual economic growth measured just 1.6% in the first quarter of 2024, following a report of persistently high inflation in March of 3.5% year-over-year. The combination of both low growth and high inflation, in conjunction with continuously high amounts of government spending and debt, has led to signs of stagflation in the U.S. economy, which wreaked havoc on U.S. consumers throughout the 1970’s, according to experts who spoke to the DCNF.
“It’s not so much that we risk stagflation as we’re already there,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “We have basically pulled forward trillions of dollars of economic growth by borrowing from the future, but that must be repaid at some point. And it is highly inefficient as well.”
Stagflation is a unique economic phenomenon that involves slow growth, high unemployment, and elevated inflation and is particularly difficult to address as solutions for one issue can exacerbate the others, according to Investopedia. The most notable example of stagflation occurred in the 1970’s, after an oil crisis.
The U.S. national debt climbed above $34 trillion for the first time at the start of 2024 and currently sits at nearly $34.6 trillion, according to the Treasury Department. The national debt has increased by around $6.8 billion since President Joe Biden first took office in January 2021.
“Stagflation is the inevitable result of Bidenomics,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF. “When you massively increase spending, whether green subsidies or student loan forgiveness, while simultaneously reducing the ability of the economy to produce because of all the regulatory restrictions being imposed, you get reductions in growth with higher prices. If Bidenomics continues, then we should expect stagflation to continue.”
Biden has made high-spending policies part of his broader agenda, signing the $1.9 trillion American Rescue Plan in March 2021 and the $1.2 trillion Bipartisan Infrastructure Law in November 2021. The president also signed the Inflation Reduction Act in August 2022, which authorized $750 billion in new spending, with $370 billion of that dedicated to green initiatives to combat climate change.
The Biden administration’s latest plan to forgive student loans would cost an estimated $559 billion over the next ten years through various loan cancellations and interest suspensions. The president had one of his previous, more costly plans to forgive student loans struck down by the Supreme Court in June 2023.
Jai Kedia, a research fellow in the Center for Monetary and Financial Alternatives at the Cato Institute, cautioned the DCNF about assuming the U.S. was suffering from stagflation, noting that the phenomenon is usually accompanied by major supply shocks.
QT continues but there's a long way to go before we return to normalcy, and that likely won't happen w/ Powell & Co. chomping at the bit to cut rates and taper the balance sheet runoff – securities are only down 18.6% from their peak and total assets down just 17.4%: pic.twitter.com/PV48bGZozW
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 25, 2024
“The news on both fronts — inflation and output — is far from ideal, but there is no reason to think that we will get stagflation from just this one report,” Kedia told the DCNF. “When stagflation last occurred in the 1970s and early 1980s, the U.S. economy had significantly different characteristics. That era was marked by severe wage inflation and strong wage contracting at unsustainably high levels, driven primarily by labor union bargaining. Businesses passed those labor costs on to consumers, and since those wage increases weren’t the result of any productivity gains, the result was inflation with little economic growth. That unique situation is (hopefully) unlikely to occur again.”
Despite recent low growth figures, gross domestic product surged in the third and fourth quarters of 2023 to 3.4% and 4.9%, respectively. Economic growth projections in those quarters included huge gains from government spending.
“Today’s report shows the American economy remains strong, with continued steady and stable growth,” the White House said in a statement following Thursday’s GDP report. “The economy has grown more since I took office than at this point in any presidential term in the last 25 years — including 3% growth over the last year — while unemployment has stayed below 4% for more than two years. But we have more work to do. Costs are too high for working families, and I am fighting to lower them.”
Top-line job growth has remained high as well, with the U.S. most recently adding a total of 303,000 nonfarm payroll positions in March with an unemployment rate of 3.9% after adding 275,000 in February. Despite persistent growth, gains have been dominated by part-time jobs and employment from the government.
“In general, high inflation and low output occur as a result of severe supply shocks,” Kedia told the DCNF. “The Fed does not have much control over such shocks, and it’s usually best to avoid making drastic monetary policy decisions on the basis of such shocks. It’s too early to tell if such a shock has occurred over the past month, so it is unclear whether output has gone down due to supply constraints, or whether the increased borrowing costs have finally cut down on people’s consumption, or whether this was a noisy data observation.”
In an effort to reduce the rate of inflation, the Federal Reserve has already raised its federal funds rate to a range of 5.25% and 5.50%, the highest in 23 years, with the last hike being in July 2023. At the Federal Open Market Committee’s (FOMC) most recent meeting in March, the majority of Fed governors kept their estimate from December that there would be three rate cuts by the end of 2024.
“There is absolutely no reason for the Fed to cut rates this year besides the obvious political motivation,” Antoni told the DCNF. “Recall that during the first three years of the Trump presidency, the Fed was raising rates and selling off the balance sheet, also called ‘quantitative tightening.’ The reasoning for tighter monetary policy was fast labor market growth and inflation fears. Today, those indicators look even worse according to the Fed’s own thinking: job growth has been much faster according to official government metrics, and inflation remains far in excess of the 2.0% target, with inflation expectations completely unanchored. They should be talking about raising rates, not cutting them.”
A majority of investors now predict that there won’t be a rate cut until the FOMC’s September meeting as inflation remains persistent, according to CME Group’s FedWatch Tool.
Business leaders are cautious about the current state of the economy, with JPMorgan Chase CEO Jamie Dimon saying on Friday that he is hopeful that the U.S. can bring down inflation and maintain growth, but he is worried about the possibility of stagflation, according to The Associated Press.
“Sadly, the indicators point to stagflation for quite some time because the excessive government spending that caused this problem isn’t letting up,” Antoni told the DCNF.
The White House deferred the DCNF to previous statements.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.