Former President Donald Trump adviser Peter Navarro told Newsmax on Monday that the recent 10% jump in homebuilding could be the "canary in the coal mine" signaling a return to the stagflation of the 1970s.
"If you have on the one hand, a lawless world in which anybody can do anything and nothing happens, and on the other hand, you have gasoline [prices] going through the charts. You're going to have what we had back in the 1970s," Navarro said during "Eric Bolling The Balance" on Monday. "The 1970s stagflation crisis, and during that time when we had an oil embargo, thieves in the night were siphoning gas from people's gas tanks, and we're going to see a reprise of that again."
Navarro said the recent report by the National Association of Home Builders that showed a 10.7% gain in sales of new family homes compared to May is more of an indication that homebuyers are trying to lock in interest rates before the full weight of the latest Federal Reserve Board increases take hold.
"We had what would look to be a pleasant surprise where housing sales were up by 10%, but if you dig down in that, it's kind of a canary in the coal mine of everything else," Navarro said. "Interest rates are going up so fast, and people were piling in to lock things in. So that's going to be, that's like the death rattle."
The stagflation crisis of the 1970s that Navarro referred to was a combination of slow growth and rising inflation creating uneven economic growth, according to an Investopedia article June 17.
High oil and gas prices, unemployment, and interest rates around 19% led to a period of extreme economic pain for most of the country that included gas rationing through odd and even license plate number days to be able to make purchases.
According to the report, it took two recessions to get the economy and inflation back under control, which took until the mid-1980s.
A June 7 report by the World Bank warned that productivity could slow from 5.7% globally in 2021 to 2.9% this year, lower than the anticipated growth rate of 4.1%.
"You're going to see the homebuilders stop building, and that will ripple through the lumber and the nail manufacturers and all of that supply chain," he said. "All these people who are in the mortgage lending [business], they're going to go to the unemployment line. The vast armies of real estate agents around this country, if they didn't prepare for what's going to be a very rainy stagflation day, they're going to the bread lines, and that's just one sector screwed up by [President] Joe Biden."
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