Kevin Swanson Discusses the Impacts of Stagflation with Family Wealth Report
If you have not heard of the term stagflation, you may be hearing it more often in coming months. Stagflation is a phenomenon when inflation is rising but the economy is shrinking. The Commerce Department recently announced that U.S. GDP declined at a rate of 1.4% for Q1 amid inflation rates of 8.5%. This comes as supply-chain issues, the war in Ukraine, ultra-loose monetary policy and massive spending post-pandemic created the perfect storm for stagflation to take hold – something we haven’t seen in the U.S. since the 1970s. To help investors understand how stagflation may impact their portfolios, Family Wealth Report spoke with Potentia Wealth CEO and Private Wealth Advisor Kevin Swanson for insight.
“The uncertainty this has caused for the typical high net worth investor, with no clear safe haven for their investments, has provoked many to simply move to cash, which could end up being a brilliant decision or a very bad mistake,” Swanson tells the publication.
“In the search for higher yield and lower duration and income funds, investors are taking on significantly more risk,” says Swanson. “As the Ukrainian conflict continues to expand through global sanctions and increasing support by NATO countries of Ukraine, we continue to see an increasing possibility of a recession soon. If this occurs, those higher risk income investments could become some of the most volatile investments in clients’ portfolios.”