Stagflation light. Slowflation. A variety of terms are floating around to describe the current state of the economy: growth that's too slow and inflation that's too high for Federal Reserve comfort.

The nicknames refer to the stagflation of the late 1970s and early '80s, when the country endured not only disco, but double-digit price increases, slow growth and high unemployment.

The risk that the U.S. real-estate market's woes might affect stocks and bonds is front and center for Raj Sharma, a private wealth adviser with Merrill Lynch in Boston. Merrill's North American economist, David Rosenberg, recently warned against a combination of slower growth and faster inflation ("slowflation") that the real-estate slowdown would exasperate.

The only question is whether the monetary tightening is enough to do so. Consistently strong monetary expansion suggests it is not. Still higher interest rates are probably needed, leading to a politically unpopular, perhaps budget-wrecking, economic slowdown. It may turn out to be "slowflation" rather than stagflation, with growth modest, but positive.