A haunting memory of the 1970— stagflation — has been resurfacing in financial circles for the better part of a year. While people have periodically worried about it at various times over the last 50 years at times of economic uncertainty, concern is ratcheting up. The reasons include President Donald Trump’s trade policies, the potential for higher deficits from extended tax cuts, and inflation that has started to climb again.
"Stagflation has definitely re-emerged as a possibility because we have these policies that could hurt consumer demand even while persistent inflation limits the Federal Reserve's ability to maneuver," Jack McIntyre, portfolio manager for Brandywine Global's fixed income strategies, told Reuters. "It's not a zero-possibility scenario anymore, by a long shot."
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