Equity 1 Group
Pushing back the frontiers of economic ignorance and restoring sound financial foundations, one family at a time.

The Next Economic Trend Has Hit the US: STAGFLATION

PhoenixCapital  |  Graham Summers

While the mainstream media is losing its mind about Trump policies, the US economy just flashed yet another major warning sign of recession.

Scratch that, this was worse than recession; this was a recession with inflation or stagflation.

Yesterday, the Chicago PMI scored a reading of 50.3.

A 50= stagnation or the beginning of a recession.

PMI in of itself is bad news. But the new orders component (the component that shows growth) came in at 49.1.

This is WELL into recession territory.

Now let’s add the worst part… Price Paid (what manufacturers are having to pay for items) SOARED to 61.4.

So you’ve got growth collapsing… and prices soaring.

This. Is. Stagflation.

Those who are ignoring these warning signs are walking into a market bloodbath. Stocks are acting like an economic renaissance has just started… but the REAL data is showing us a recession and even worse, a recession coupled with higher inflation.

Indeed, 2016 GDP growth was the worst since 2011… while inflation expectations have shot higher. Looking at a chart of the two, it’s easy to see which direction each is heading.

The reality is that the Trump administration is inheriting an inflationary recession. The markets have yet to fully discount this fact, which is why stocks are holding up for now.

This will not continue much longer. And anyone who is investing based on expected GDP growth of 5% this year and next is going to get taken to the cleaners.

Advertisements

No Responses to “The Next Economic Trend Has Hit the US: STAGFLATION”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: