Stagflation fears based on 'misnomer'

Spectre of stagflation seems unlikely

Lauren Mason
clock • 3 min read

The “nightmare scenario" of stagflation rearing its head is less likely than many investors think, according to investment professionals, who say the current backdrop is not comparable to the last prolonged period of stagflation during the 1970s and early 1980s.

However, they warn that expectations for stagflation could lead to a "significant reversal" across nominal bond and equity markets. Stagflation, when economic growth slows and unemployment increases while inflation ticks higher, creates a tough environment for investors, given consumer spending slows, companies' earnings fall and unemployment continues rising.  It is a difficult cycle to break, as evidenced between 1973 and 1982, when the oil embargo of 1973 hit prices and first challenged the seemingly stable inverse correlation between inflation and unemployment. But despite the ...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

NextWealth MD Hopkins on staying ahead of advice sector changes, data challenges and flattening MPS fees

NextWealth MD Hopkins on staying ahead of advice sector changes, data challenges and flattening MPS fees

Making technology work better

Katrina Lloyd
clock 03 July 2025 • 9 min read
IFAs look to boost clients' private markets exposure

IFAs look to boost clients' private markets exposure

Expect increase in stock market volatility

Jen Frost
clock 02 July 2025 • 2 min read
Winds of change: Private markets access for retail investors

Winds of change: Private markets access for retail investors

Investing in LTAFs, accessibility aside, needs careful consideration

Dorian Hughes
clock 02 July 2025 • 5 min read