Fears of 1970s-style stagflation arise with oil spike to $100. How big a threat is it？

With oil spiking to $100 a barrel and the job market essentially paralyzed, the threat of stagflation again is looming over the U.S. economy and financial markets.

High inflation and slow growth present a double threat, as stimulative measures such as interest rate cuts and government spending only aggravate inflation. Persistently higher prices in turn can put a damper on the labor market as well as the consumer spending that drives more than two-thirds of the U.S. economic engine.

“I have been concerned about the threat of stagflation for a long time, in part because there are so many different inflationary pressures on the economy,” CME Group chief economist Erik Norland said. “You have huge budget deficits, inflation above target, and central banks are easing policy anyway. And then you add to that $100 per barrel oil.”

Markets were rattled again Thursday over the prospect of prolonged fighting in the Middle East and a blockage of the Strait of Hormuz. , the international benchmark, briefly hit $100, while U.S. crude was up by about 8.5% at 10 a.m. ET.