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- Slower growth and rising inflation has brought back distant cries that stagflation is coming.
- This would force interest rates to stay higher for longer, putting pressure on US businesses and consumers.
- One investor says anyone looking to hedge this risk should focus on fixed income.
A pair of economic reports has brought back a word no central banker ever wants to hear: stagflation.
The difficult scenario occurs when inflation rises and growth stalls, a dangerous combination just experienced by the US economy.
Worries emerged when Thursday’s first-quarter GDP reading slumped against expectations, growing at an annualized 1.6% rate. That’s a considerable slowdown from previous quarters, and falls well under estimates of 2.5%.
Just a day later, personal consumption expenditures…
