In the 1970s, when growth was stagnant and inflation was high, economists spoke of "stagflation." Four decades later, there's another threat to a sustainable trajectory of economic and corporate profit growth. It's "screwflation," which combines inflation with the screwing of the struggling middle class. Like stagflation, screwflation also threatens the general health and valuation of the U.S. stock market.
While the U.S. economy, in real terms, has more than doubled in the past 30 years and corporate profits will soon attain a new peak, median real wages have made little recent progress, and surging food and energy prices (among other cost pressures) now eat up middle-class incomes. Moreover, the lost decade of flat stock prices and an unprecedented four years of declining home prices have further weakened the confidence and purchasing power of the middle-class screwees.
The structural weakness in the labor market also makes this cycle unusual, and far worse for many, long-term, than the downturns of the 1970s. Unemployment has exacerbated screwflation's impact on all but the wealthiest Americans.....(click link above to read entire article)
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