(FORTUNE Magazine) – What should we make of the media rumblings that stagflation is about to rear its ugly head again? Stagflation, in case you missed it the first time around, is economic stagnation plus inflation--a nasty combination. It was a shock when it arrived to paralyze the U.S. economy in the mid-1970s, especially since economists had spent a decade telling Americans that higher inflation goes hand in hand with faster growth. Now, though, those declaring that stagflation is upon us again (or approaching fast) are the ones spreading misinformation.

Yes, the post-Katrina energy crunch spurred the biggest one-month jump in consumer prices in 25 years, and growing deficits are cause for concern. But this is no replay of the disco era. By the time the oil crisis hit in the '70s, inflation had been on the march for years. That's hardly the case now: Just two years ago there was frantic talk of deflation. Another big difference is the level of the "misery index" (unemployment plus inflation). In 1975 it was at 19; this September it was just under ten. Inflation is also about half its mid-1970s level, and the Fed has indicated it will keep raising rates as necessary to control it. "It's definitely a false scare," says economist Dan Jester of Economy.com. "As long as we can get over the hump in the next couple of months, I think we're going to be in good shape going into next year." Jester expects a slow fourth quarter as the Katrina recovery continues. But he says that for the U.S. to tumble into stagflation, wages would need to soar and job growth would have to grind to a halt. The outlook just isn't that ugly.