>And a single Q is no evidence of a sustainable trend. Given the continuing fragility of financial and credit situation, and the prospect that economies like China may be entering a period of cyclical slowdown, I wouldn't be in a hurry to revise the secular stagflationary perspective.
True. But stagflation needs wages that can rise faster than productivity, which is clearly not happening. And the Fed would have to behave as in the 70's for inflation to get out of control--and the whole point of Fed policy since Volcker has been to avoid that. The balance of payments adjustment if China slowed would benefit US manufacterers.
What part of the financial scene are you referring to?
Christian