What is "stagflation?" Stagflation happens when the economy is experiencing both economic stagnation – stalling or falling output – and high inflation. Such an unfavorable combination is feared and can be a dilemma for investors. It is important to not get bogged down in day-to-day numbers and market fluctuations, but to rather look at the trends with an understanding that it normally takes months, if not quarters, for a change. The charts below are specific to the US, but this is affecting the global economy. Many people will be feeling the pinch in the short-term; just know you are not alone.
All of the above data consists of the “as reported” figures from the Burau of Labor and Statistics (BLS). Current data are not comparable to the historic data because the CPI methodology has changed 19 times since the early 1980s. Review below.
Now for the hard part: The GDP (Gross National Product) is not healthy at all and major brokerage firms are lowering estimates. The below estimates are from the Atlanta Federal Reserve which are well under 2% growth.
The next GDPNow update is Wednesday, March 16
Unemployment on the surface looks outstanding until wage growth is considered.
Feeling the pinch? Know you are not alone. We are here to help guide you the best we can through this cycle which will most likely last for more quarters to come.
10/05/2021: Conflicting Inflation Data - What is it Really Saying?
This is the most globally complex and demanding financial environment seen in our lifetimes.
5/12/2021: Transitory Hyper-Inflation?
There is a real price squeeze ("transitory" inflation) affecting businesses, consumers, investors, and the unemployed.
12/09/2020: Charts of Interest - December
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Data and rates used were indicative of market conditions as of the date shown. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Past performance is not a guarantee of future results.