Peter Schiff: Stagflation Is Coming (Video)
Peter Schiff recently appeared on RT Boom Bust, along with Investor’s Advantage Corporation founder John Grace, to talk about the recent jobs report. Peter summed things up with a dire warning. Stagflation is coming and it’s going to be worse than 2008.
The number of jobs in the September report created came in below expectations, but the unemployment rate dipped to “the lowest level since 1969.” Wages were up 0.3%.
Grace opened things up asserting that wage growth is not keeping up with the pace of inflation. He said that in order to keep pace with rising prices over the last decade, an American household would have needed to increase earnings from an average $57,000 annually in 2007 to $67,000. But average 2017 average earnings only came in at around $61,400.
Host Bart Chilton then brought up the fact that Trump economic advisor Larry Kudlow recently claimed wage growth was actually better than the official government numbers. He asked Peter if we need to take another look at how we calculate wage growth.
Well, first of all, a lot of things need to be recalculated. I think the way the government measures inflation, I think it does a bad job of capturing the true increase in the cost of living. So, I think real wages have fallen a lot further than the official statistics would reveal.”
Peter also took issue with the notion that unemployment is at the lowest level since 1969.
You know, as Donald Trump used to correctly point out when he was a candidate for president that the numbers are not real because we no longer measure the unemployment rate the way we measured it back then. If we did and we counted all the people who are working part-time who want to work full time and all the people who are discouraged and not just the people who are discouraged for one year like we get in the U6, but all the long-term discouraged unemployed, the real unemployment rate is well above 10% right now. So, we’re not even close to where we were in 1969. But also, you have to remember, by 1970 the unemployment rate had soared back above 6%. So, things can change very quickly.”
Peter went on to note the rising interest rates and the rapidly increasing levels of American consumer debt.
They have mortgages. They have car loans, student loans, credit card debt. All that is going to be eating a bigger chunk of their income. Gas prices are rising. Oil prices have almost doubled this year. They’re going to keep rising, especially when the dollar starts to fall. And these Trump tariffs are just going to add more to the rising cost of living. So no, I think real wages are falling and pretty soon employment is going to be falling too.”
Peter said ultimately, we are heading toward a recession.
This is going to be stagflation, so it’s going to be much worse than what we had in 2008 and 2009.”
Peter was also asked about what sections of the jobs market have done poorly. He said the economy has mostly created a lot of low-paying service-sector and part-time jobs.
All these jobs are a function of the bubble and when the bubble pops, the jobs go away. It’s all been a function of artificially low interest rates. We built an economy on a foundation of cheap money. That cheap money is getting a lot less cheap. Soon it’s going to be expensive and that whole house of cards is going to come tumbling down.”
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