Fuel prices are soaring. War is raging on Europe's doorstep. Even ABBA are back on tour - albeit in avatar form.
With worker unrest ramping up against the backdrop of cost of living increases, some are wondering aloud - are we reliving the 1970s?
Another flashback from the disco era came last week when the World Bank raised what it believes is the very real prospect of 'stagflation' - a term we've been hearing with greater regularity and are likely to do so even more in the months ahead.
The Washington-based institution, along with a raft of other outlets, issued updates in the last fortnight.
They're all saying pretty much the same thing - the global economy is on course for slower growth amid further steep price rises accompanied by higher interest rates.
"The global outlook faces significant downside risks, including intensifying geopolitical tensions, an extended period of stagflation reminiscent of the 1970s, widespread financial stress caused by rising borrowing costs, and worsening food insecurity," the World Bank said in its report.
"For many countries, recession will be hard to avoid," the Bank concluded, adding that it expected "essentially no rebound" next year.
What is stagflation?
Originally coined in the 1960s, and attributed to British MP Iain Macleod, 'stagflation' is an amalgam of the words, stagnation and inflation.
And that's essentially what it is - a situation where economies are contracting but prices continue to rise.
It's a toxic mix, often referred to as a 'double whammy' for consumers who are paying higher prices for goods and services against a backdrop where pay is likely to remain static - and that's for those who are lucky enough to have a job as unemployment inevitably increases.
For decades, economists didn't think such a potent combination of circumstances was even possible. They thought inflation would run high only when the economy was strong and unemployment low - which sounds logical.
But the oil crisis of the 1970s changed all that. Economists and central bankers were stumped on how to deal with a period of high inflation and weak economic growth sparked by commodity and supply shocks.
Back to the Future
That looks a lot like the scenario we're facing now - a parallel which the World Bank pointed to in its latest outlook, where it identified three key ingredients for a stagflationary environment.
The first, 'persistent supply-side disturbances fuelling inflation', is essentially what we've seen in the aftermath of the pandemic as economies reopened and supply chains adjusted to a bounce back in demand.
When that's 'preceded by a protracted period of highly accommodative monetary policy in large, advanced economies', the prospect of stagflation intensifies.
Such policies were put in place by all the major Central Banks over much of the last decade with interest rates at rock bottom (or even negative) and billions of euro, dollars and pounds being spent every month on purchasing bonds to keep sovereign and commercial borrowing costs low.
The third feature is 'prospects for weakening growth' amid monetary policy tightening, which is essentially the situation the global - and particularly the euro zone - economy has found itself in of late.
As interest rates are about to be hiked in the euro zone (and are already on the way up across most major economies), it coincides with a period of economic challenge which is being intensified by the war in Ukraine.
Is stagflation here?
The 'flation' part is certainly here, but the 'stag' has yet to make an appearance.
Right now, most advanced economies are still doing relatively well - albeit in an environment where storm clouds are gathering - and, importantly, unemployment is low.
However, there are vulnerabilities, particularly in Europe.
The German economy - the biggest in the euro zone - dodged recession by posting growth in the first quarter of the year after contracting in the final quarter of last year.
A recession is defined as at least two back-to-back quarters of economic contraction.
Figures from the UK Office for National Statistics this week concluded that the British economy had contracted by 0.3% in April, which together with the 0.1% pullback in March, was the first time the economy had contracted for two months in a row since Covid struck.
The Bank of England has warned of the prospect of recession and inflation rising above 10% - together, they're the raw materials for stagflation.
The OECD was relatively bullish on the outlook for the UK economy this year where it's pencilling in growth of 3.6% before slumping next year.
Overall, the Paris-based institution is reluctant to draw too many parallels to the 1970s oil shock and it believes the risk of stagflation is limited.
"Global growth will be substantially lower with higher and more persistent inflation," OECD Secretary General Mathias Cormann said, adding that the organisation was not forecasting recession although there were numerous downside risks to the outlook.
The OECD points out that economies are less energy intensive now, Central Banks have more robust mandates and frameworks, and consumers still have a glut of pandemic savings that provides something of a buffer for domestic economies.
That, it believes, should be enough to stave off stagflation - for now.
Interest rate conundrum
It's against this precarious backdrop that the European Central Bank has had to make its monetary policy decisions.
Some argue that the ECB has been slow to act in the face of rising prices and should have pulled the lever on rate hikes by now.
The Bank of England and the US Federal Reserve have been increasing interest rates for some months.
However, the ECB is walking a monetary tightrope, balancing the need to bring inflation under control while not hampering economic growth.
It has signalled a rate hike of 0.25% next month followed by a potentially larger move in September, if inflation does not cool down.
It has left itself plenty of room for manoeuvre, should circumstances change, but opinion is divided on whether it's on the right path.
"For the ECB to raise interest rates sharply and quickly could forestall an inflationary spiral, but at the cost of strangling economic activity," Patrick Honohan, a former Governor of the Central Bank of Ireland, wrote in the Irish Times last week.
"It has to be acknowledged that, while monetary policy can bring inflation under control, the recessionary costs of doing so too quickly can be high," he added.
Which begs the question, is recession an inevitability when inflation is so high, and the action required to bring it down is so severe?
And do Central Banks then have to do a swift about turn to bolster economies again?
The ECB is all too mindful of the last two occasion on which it raised interest rates (in 2008 and 2011) and had to reverse course shortly afterwards.
Are we likely to see stagflation in Ireland?
Given the distorting effect that multinationals tend to have on our GDP, it's unlikely that we will technically fall into a recession any time soon.
In fact, stockbroker Davy recently upgraded its outlook for GDP growth this year to double digit percentage growth on the basis of the stronger-than-expected 10.8% bounce back in the first quarter of this year.
However, there was a slight fall in domestic demand in the quarter with consumer spending down marginally, following another small decline at the end of last year.
"This is a little puzzling," Davy's chief economist Conall MacCoille said.
"The weak spending data are difficult to square against the more buoyant output data," he added, pointing to credit and debit card spending which showed a clear pickup in spending on hotels and restaurants and other tourism related activities.
So, are we seeing the start of a pullback in consumer spending and is that likely to intensify?
"If wages aren't rising as fast as inflation, there's going to be a soft patch in consumer spending," he said.
He cautioned that it wasn't the time to go try to tackle it with tax cuts or giving broad based welfare supports.
The Government, he said, should instead target the most vulnerable households.
"You can't chase prices higher here. If we're paying more for oil and energy, ultimately that's bad news one way or the other," he explained.
How bad that news is largely hinges on the longevity of the war in Ukraine and how much further energy prices have to climb.
Recession in Ireland looks unlikely at this point, but the picture could change quickly.
Don't rule out a return of wide lapels just yet!
