If you've spent any time on financial social media lately, you've probably seen the chart. It's the one that overlays today's inflation trajectory on top of the infamous 1970s spiral, and it's designed to make you panic. For the inflation doomers, the message is clear: a second wave is inevitable, and double-digit CPI is just around the corner.
ING economist James Smith has a different take. He calls that chart a "chart crime." His point? Visual similarities are neat and often irresistible, but they don't make a perfect match. "Historical parallels are neat and often irresistible. But no period is a perfect match," he wrote in a recent analysis.
It's easy to see why people are drawing comparisons. Jerome Powell rode into the sunset without hitting the 2% inflation target. Energy prices are climbing again amid tensions with Iran. And policymakers are still dealing with the aftershocks of the post-COVID economy. But according to ING's framework, the underlying structure of the modern economy is fundamentally different from the one that produced the stagflation crisis of the 1970s. That distinction matters because, while the risks in 2026 are real, they come from supply-side pressures and structural constraints — not the same forces that drove the 1970s spiral.
Key Structural Differences
Smith points to three major differences. First, oil dependency. Even with crude prices above $110 a barrel, inflation-adjusted oil prices are still well below the peaks of the late 1970s energy crisis. Western economies simply consume far less oil than they used to. ING data shows that per-capita oil consumption has fallen by about one-third in the U.S. and by more than 50% in the U.K. over the past few decades. Modern economies run on electricity and tech infrastructure, not crude-intensive industrial activity.
Second, the labor market is different. It no longer supports the self-reinforcing wage-price spiral of the 1970s. Unionization rates have collapsed from around 35% in 1980 to 15% today. Wage indexation and strike activity are far less common, reducing the risk that higher prices will push wages up and embed inflation more deeply into the economy.
Third, central banks have changed. Smith argues that modern policymakers are "paranoid" about repeating the mistakes of former Federal Reserve Chair Arthur Burns, who let inflation expectations become entrenched in the 1970s. Today's central bankers are aggressively monitoring inflation expectations and remain willing to tighten monetary policy further if inflation accelerates again.
Different, But Not Disappearing
Rejecting the 1970s analogy doesn't mean inflation risks are gone. Adam Ballantyne, a principal at Cambiar Investors, argues that a "unique second wave of inflation may already be underway," though driven by very different forces. Unlike the demand-driven surge of the early 2020s, Ballantyne sees supply constraints, tariffs, geopolitical fragmentation, reshoring initiatives, and years of underinvestment in commodity capex as the main drivers.
Commodity markets are already reflecting these pressures. Steel, aluminum, food products, oil, and cotton have all seen sharp price increases over the past year. The momentum has carried into 2026, as seen in the performance of the Invesco Optimum Yield Diversified Commodity Strategy (PBDC), which is up 35.17% year-to-date.
"Inputs such as steel, cotton, fuel, and agricultural products influence everything from housing materials and transportation costs to apparel, industrial equipment, and consumer goods. As a result, sustained increases in these areas can exert renewed upward pressure on inflation, even in a slower-growth environment," Ballantyne explained.
He also noted that corporate management now appears far more willing to pass higher costs directly onto consumers, having learned during previous inflationary periods that they can preserve margins that way.
No Easy Way Out
Meanwhile, U.S. inflation accelerated to 3.8% in April, and one-year inflation expectations surged by 124 basis points since March. JPMorgan economists have argued that higher energy costs, weaker consumer purchasing power, and deteriorating business confidence have effectively taken the market's preferred scenario — inflation cools and the economy continues to expand — off the table.
All of this makes the 1970s look almost simplistic in comparison. If inflation remains supply-driven, central banks might have far less leeway to rescue markets via aggressive rate cuts during economic slowdowns. In that case, the market will increasingly reward businesses with genuine pricing power, durable cash flows, disciplined capital allocation, and strong balance sheets — rather than companies that merely benefited from the era of cheap money and abundant liquidity.
