The Economy, Stupid Stagflation is about to push unemployment higher: here's what to expect
Mar 26, 2026
Gareth Hutchens, ABC business and economics reporter who tracks how big shocks hit everyday life. Bob Gregory, former Reserve Bank board member who lived through 1970s stagflation. They recall the 1970s surprise, policy missteps, oil and wage drivers, current geopolitics and energy risks, debates over rate rises and unemployment, and whether productivity or AI could change the outlook.
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When The Seesaw Snaps Stagflation Explained
- Stagflation breaks the usual inflation–unemployment tradeoff where one rises and the other falls.
- Peter Martin and Bob Gregory highlight the 1970s example where inflation and unemployment climbed together after shocks compounded existing wage pressures.
Bob Gregory's Firsthand Shock Of The 1970s
- Bob Gregory recalls astonishment at the speed and size of both rising inflation and unemployment in the mid-1970s.
- He notes officials watched data week by week yet were shocked by how large the changes became.
Wage Boom Pushed Prices Higher
- Fast real wage growth in the late 1960s and early 1970s (around a 50% rise for male full-time workers) shifted national income toward wages and away from profits.
- Bob Gregory argues that rising wages outpaced productivity, forcing firms to raise prices and contributing to inflation.