Should we fear stagflation?

Stagflation – a toxic mixture of weak growth plus inflation – is rearing its ugly head again. Can we avoid it?

Paul Volcker
Paul Volcker killed off stagflation – at a cost
(Image credit: © DON EMMERT/AFP via Getty Images)

Ever since coronavirus vaccines arrived on the scene more rapidly than expected last year, the hope has been that economies could re-open quickly, households flush with savings would go out and spend, and we’d see a resurgence in growth to match the slide seen during global lockdowns. In the stockmarket, this particular bet was known as the “reflation” trade, with the companies hardest hit by lockdowns rebounding, while other “value” stocks such as miners benefited from surging demand for resources.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.