ENB - 4.3% Average Yield - 3 Terrific Dividends For Safety Income Growth And Alpha
2024-05-31 07:30:00 ET
Summary
- Stagflation, a mix of stagnation and inflation, hasn't hit the U.S. since the 1970s but fears are rising as economic growth stumbles and inflation persists.
- Investors can prepare by focusing on real assets like infrastructure, energy, and real estate.
- These stocks have a history of outperforming the S&P 500 with lower volatility. By including them in a balanced portfolio, investors can hedge against economic uncertainties and achieve consistent returns.
Introduction
Although the market is still at an all-time high, I'm increasingly encountering the S-word in articles. When dealing with markets and economics, it's the S that stands for "stagflation."
Essentially, stagflation is the worst of both worlds, with "stag" standing for stagnation (no growth) and "flation" standing for the end of the word "inflation," which is positive year-over-year growth in prices.
What's interesting is that the last time the U.S. had stagflation was back in the 1970s, when slow economic growth met rapidly rising prices and a wave of monetary and fiscal challenges.
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The 1970s saw growing federal budget deficits boosted by military spending during the Vietnam War , Great Society social spending programs aimed at fighting poverty, and the collapse of the Bretton Woods agreement.
Meanwhile, unemployment had exceeded standards set in two prior decades , and growth was uneven. The economy was in a recession from December 1969 to November 1970 and again from November 1973 to March 1975 . When not in a recession, the economy saw real gross domestic product (GDP) grow at a rate of above 5% between 1972 and 1973 and mostly above 5% between 1976 and 1978. This set the stage ahead of oil price shocks that would curb growth while fueling inflation . - Investopedia (emphasis added)