Will 2022-23 be 1973-74?

In January of 1973 inflation was 3.6%. At the end of the year it was 8.7%. By November 1973 the S&P had dropped 20% from it’s high.

Inflation is now at 8.6% while the S&P 500 has fallen 23%.

In 1974 inflation continued to climb up to 12% while the S&P was cut in half.

There was much domestic and international conflict during this time (Watergate and Vietnam).

Will economic history repeat itself?



Wasn’t 1973-4 driven more by the Arab Israeli war quadrupling the price of oil?

So in 1974 central bankers decided to keep overall inflation down, which meant reducing the price of non-oil stuff. Which produced the recession and stockmarket halved.

Pivot at the beginning of 1975 and the stock market bounced back, ie literally doubled as did gold.

Same thing both in UK and US suggests it wasn’t all anyone’s domestic politics. But yes so long as the Fed stays the course, to get overall inflation down without oil coming down … other things need to and it’s going to be a bit miserable.

To paraphrase the Fed’s current aim … people are miserable they can’t afford stuff because of inflation … so let’s cut their income/assets so they can afford even less …