Supply is usually the culprit, not demand
Since the fighting began in Ukraine, bond yields in the US have moved lower and equities have trailed off by about 2% globally. Meanwhile, the Federal Reserve Bank of Atlanta’s “GDP Now” forecast has plunged to predict zero growth in the first quarter of 2022.
Simultaneously, inflation rages and is likely to be pushed higher by surging global energy and commodity prices owing to war, sanctions, and the threat of supply disruptions. It is little surprise that the word “stagflation” is trending as the world grapples with the possibility of both slower economic growth and higher inflation.
