The scariest portmanteau in macroeconomics is making a comeback in market discourse: stagflation.

The US-Israeli conflict with Iran has effectively halted tanker traffic in the Straight of Hormuz, a critical chokepoint for the global supply of energy commodities, sending Brent crude prices above $100 a barrel for the first time since 2022. The events stand to exacerbate inflation that’s been stubbornly elevated for five years and hit an economy that, according to data released Friday, expanded at just a 0.7% annualized pace in the fourth quarter. Meanwhile, the US labor market looks brittle and susceptible to any hit to consumer confidence.

© Bloomberg