An economic downturn combined with high inflation is a double-whammy for your finances.
by Richard Trenholm
c|net
Recessions are scary. Stagflation, a combination of stagnating growth and high inflation, is even scarier.
Over the last couple of months, President Trump’s turbulent tariff agenda has resurrected fears of this rare and toxic scenario in which prices rise as the economy slows and the labor market suffers. Stagflation conjures up the major economic crisis in the 1970s, marked by double-digit inflation, steep interest rates and soaring joblessness.
After Trump’s temporary truce with China in early May, investors breathed a sigh of relief, and the risk of a severe economic crisis fell considerably.
Yet, according to JPMorgan & Chase CEO Jamie Dimon, the odds of stagflation, “which is basically a recession with inflation,” are roughly double what the market thinks. The tariffs remain “pretty extreme,” even at their lower levels, Dimon noted on Monday.