Is it time to dust off the financial playbook from that dismal decade?

Are you ready for a '70s show, but for real?

Surging inflation. Falling wages. An energy crisis. Growing international conflicts. A losing war. A divisive and increasingly unpopular president who appears to be talking into a void.

And some Republicans claiming Watergate was a hoax.

Am I talking about the disastrous 1970s, or today?

If the latest jobs report is any guide, maybe both.

And if that's the case, to jump briefly to the conclusion, we might need to dust off the financial playbook from that dismal decade.

That means playing financial defense at home, tightening our belts and getting used to living standards that don't rise, or rise and fall sporadically. And it potentially means having exposure to gold SGOL, energy stocks XLE and inflation-protected TIPS bonds SCHP in our retirement portfolios. During the 1970s pretty much all the mainstream investments that everyone owned - including the S&P 500 SPX and bonds - lost money.

Friday's figures from the U.S. Labor Department show that American wages are falling in real, inflation-adjusted terms. They also show that job creation has slowed sharply, plunging last month to less than a third of economists' forecasts.

Average hourly earnings rose 0.13% last month, says the Labor Department. For those who are counting, that's a glorious extra 5 cents an hour.

Don't spend it all in one place!

Oh yes, that extra nickel is before taxes.

This comes at a time of rising productivity and a booming stock market. Meanwhile consumer prices rose in September by 0.53%, or four times as fast as earnings, according to the latest estimates from the Federal Reserve Bank of Cleveland. This isn't a one-off event, either.

Over a year, average earnings rose 3%, but prices rose 3.6%. In real purchasing power terms, inflation has now wiped out effectively all of workers' gains for two years, putting hourly earnings back to where they were in the fall of 2024.

The main culprit is an energy crisis that the U.S. government seems powerless to stop. The Iranian takeover of the Strait of Hormuz is not really any more humiliating than the two OPEC oil embargoes of the 1970s. Rocketing diesel prices mean the price of everything we buy will keep rising. Last month, prices rose at an annualized rate of 6.5%, the Cleveland Fed estimates. We better hope they are wrong.

The official figures come out on Oct. 14.

The latest gaps between wage increases and prices may seem small, but that's because we're only looking at short-term moves. It's over the longer term that the real pain makes itself felt. The longer the trend continues, the more the gap between prices and wages widens, and the more living standards erode. Real average wages fell by 7% over the 1970s.

And all this assumes the official inflation figures actually reflect the real-world experience of ordinary people when they go to the store or pay their monthly bills You don't have to be a conspiracy theorist to think they don't. Even a former U.S. comptroller of the currency agrees.

Maybe this is why most people, even including a majority of Republicans, are now unhappy about the economy.

The headline job-creation numbers in the latest report have been widely covered. Among the footnotes, however, is that over the past year nearly 1 million fewer native-born Americans have jobs, while an extra half-a-million immigrants are employed. The great war on immigrants doesn't seem to be working.

Few in finance today have much memory of the lost decade for U.S. stocks of the 2000s, but hardly any remember the much worse 1970s. Data from New York University's Stern School of Business show that between Jan. 1, 1970 and Jan. 1, 1980, the S&P 500 in total earned you 4% above inflation. Not 4% per year: In total, over the entire decade - and that's before taxes and fees. Keeping your money in Treasury bills or short-term cash lost you 11% in real, inflation-adjusted terms. Holding investment-grade corporate bonds lost you 17%, and 10-year Treasury bonds 35%. Again, all before taxes and fees.

Good times.

During the same period, according to data from Dartmouth finance professor Kenneth French, energy stocks doubled your money - after inflation. Gold went up over 500% during the decade even after inflation, partly because the price had been artificially suppressed by governments for the previous four decades.

As for inflation-protected TIPS bonds? These adjust the value of your bonds to reflect changes in the consumer-price index. They didn't exist in the 1970s, alas. Happily, TIPS have become so cheap this year that you can now lock in returns guaranteed to beat inflation by 2.5 percentage points a year even on the shorter, less risky and less volatile bonds. The long-term ones have real yields, meaning yields in excess of future inflation, up to about 3.3%. These deals have rarely been seen. But the longer bonds do entail more volatility.

The low-risk way to handle this is through a short-term TIPS fund such as the iShares 0-5 Year TIPS Bond ETF STIP, which has low volatility and inflation protection.

I'm hoping we don't end up back in that dismal scenario. But as Jack Reacher says, hope for the best, and plan for the worst.

-Brett Arends