By Julia Horowitz, CNN Business

Mention the word “stagflation” to someone who followed the economy in the 1970s, and you can expect a strong reaction.

The phenomenon – which describes a period of high inflation and stagnant economic growth – was a nightmare for policymakers, leaving them few options to curb the spike in prices without hurting the economy. Federal Reserve Chairman Paul Volcker was eventually forced to raise interest rates to unprecedented levels to keep inflation under control.

Now for the bad news: decades later, the talks about stagflation are back.

“It can be argued that a ‘slight’ stagflation is already underway,” wrote economist Nouriel Roubini in a recent column. “Inflation is rising in the United States and many advanced economies, and growth is slowing sharply, despite massive monetary, credit and fiscal stimulus.”

Meanwhile, economists have downgraded economic growth forecasts as they assess the impact of the highly contagious Delta variant of the coronavirus, which comes as some stimulus measures begin to run out of steam.

A prolonged period of stagflation is still not the basic assumption among economists and Wall Street investors.

“Is this a permanent state, or is it [it] more related to the friction around the reopening? I think most are temporary, ”said Neil Shearing, group chief economist at Capital Economics.

But special attention should be paid to what is going on. While the Federal Reserve also maintains that recent inflation is transient and will subside once post-pandemic supply chain pressures and labor market disruptions abate, consumers are showing increasing anxiety. .

Last week, the Federal Reserve Bank of New York released its latest survey on consumer expectations. He found that inflation expectations for the coming year were at an all-time high, as were those for the three-year horizon. The data goes back to 2013.

Break it down: Economists are watching inflation expectations closely because they could encourage workers to demand higher wages. If consumers are paid more, their purchasing power increases and businesses can raise prices again, which starts the whole cycle over again.

In a recent note to clients, Bank of America strategists Ohsung Kwon and Savita Subramanian also raised concerns about energy prices. The 1973 oil crisis is widely believed to have exacerbated the inflation problems.

“While not our baseline scenario, stagflation has often been accompanied by oil shocks, and with crude prices recently jumping on supply chain disruptions, the risk of Oil shocks increased, ”Kwon and Subramanian said.

What Happens Next: The economy is showing signs of resilience against the Delta variant. But Kwon and Subramanian advise their clients to consider stocks with healthy dividends and stocks of small companies that are more inflation-protected.

Those responsible for managing the economy must weigh a complex matrix of factors. Federal Reserve and Bank of England officials, who will meet this week, must decide whether to stick to their assessment that the problem is fleeting.

This would allow them to start withdrawing their support during the crisis in an orderly fashion. But as the chatter about stagflation increases, these decisions won’t be easy.

“It’s going to be an uncomfortable few months for central banks,” Shearing said.

Catch Up With The WSJ’s Facebook Success Survey

Last week, the Wall Street Journal ran a series of damning articles on Facebook, citing leaked internal documents that detail in remarkably blunt terms how the company is not only well aware of the negative effects its platforms have on users, but also how she repeatedly failed. to address them.

There is a lot to unpack from the Journal’s investigation. But one thing that stands out is how blatantly Facebook’s problems are documented, using straightforward observational prose not often found in internal communications of multinational corporations, writes my CNN Business colleague Allison. Morrow.

On adolescent health: In the Journal’s report on Instagram’s impact on teens, reporters cite a slideshow from Facebook’s own researchers.

“We make body image issues worse for one in three teenage girls,” a 2019 slide said, according to the WSJ. Another reads: “Teens blame Instagram for increasing rates of anxiety and depression… This reaction was spontaneous and consistent across all groups.”

Facebook White List: Facebook CEO Mark Zuckerberg has repeatedly publicly argued that Facebook is a neutral platform that puts its billions of users on an equal footing. But in another report on the company’s practice of “whitelisting” – a policy that allows politicians, celebrities and other public figures to flout the platform’s rules – the WSJ found a review 2019 intern who called Facebook for misrepresenting themselves in public.

“We don’t actually do what we say we do publicly,” the journal said, according to the newspaper. “Unlike the rest of our community, these people” – the whitelisted ones – “can violate our standards without any consequences.”

More and more angry: In 2018, Zuckerberg said that a change in Facebook’s algorithm was aimed at improving interactions between friends and family and reducing the amount of professionally produced content in their feeds. But according to documents released by the Journal, staff members warned the change was having the opposite effect.

A team of data scientists put it bluntly: “Misinformation, toxicity and violent content are excessively prevalent among reparts,” they said, according to the Journal report.

On Monday: NAHB Housing Market Index

Tuesday: OECD Economic Outlook; building permits and housing starts in the United States; AutoZone, Adobe, FedEx and Stitch Fix Benefits

Wednesday: the political decisions of the Bank of Japan and the Federal Reserve; Sales of existing homes in the United States; General Mills benefits

Thusday: political decision of the Bank of England; revenues from Darden, Rite Aid, Nike and Costco restaurants; Initial jobless claims in the United States

Friday: New home sales in the United States

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