Falling wages, soaring energy prices and inflation: It’s beginning to look a lot like the 1970s

The comparison to the 1970s rests on a specific combination: weakening wage growth, rising energy costs, and persistent inflation occurring together. That mix matters because it echoes the stagflationary conditions of that decade, when slow growth and high inflation coexisted rather than offsetting each other as conventional policy models assumed.

For markets, the reference point is less about prediction than about framework. The 1970s playbook included commodities and real assets outperforming, bond yields staying elevated, and equity valuations facing sustained pressure. Whether today's conditions follow a similar path depends on factors that differ from that era — notably central bank credibility, energy supply structures, and the flexibility of labour markets.

What to watch is whether wage and energy pressures prove temporary or become self-reinforcing through expectations. If inflation expectations stay anchored, the parallel may remain loose. If they drift higher, the comparison gains more weight, and the historical playbook becomes a more relevant lens for assessing risk across asset classes.