Let’s talk… the Fed and Interest Rates!!
I’m having people ask me if we have the dreaded stagflation in today’s economic environment. So let’s take a look at the current state of the economy and compare it to a textbook definition of stagflation. You’ll see that the answer is a resounding no (not yet, at least). Stagflation is persistently high interest rates in a slowing economy with high unemployment.
Right now we have slowing growth because the GDP was negative last quarter, inflation is elevated but coming down, and unemployment is 3.6pct (as of April’22), which no analysts would consider high. It’s my opinion that the inflation we are seeing is caused by supply chain disruptions that are directly a result of China’s COVID policy, along with the persistent war between Russia/Ukraine.
In the end, you need to ask yourself, if you think this will last forever and invest accordingly. In my opinion, this isn’t going to be over tomorrow, but I don’t think this goes on for an extended period. Keep in mind you need to have an investment horizon and that needs to be in keeping with the current state of the world and the situation we find ourselves in today.
The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
