R&I – FS
Stocks took a hit Tuesday after disappointing economic data showed consumer spending fell more than economists anticipated last month, prompting fears that recently spiking inflation coupled with the delta variant’s spread could lead to a period of stagflation—an uncommon scenario that’s fueled broad market sell-offs in the past and is characterized by stagnant economic growth and prolonged inflation.
“This is what stagflation looks like,” money manager Tom Essaye, founder of Sevens Reporter Research, wrote in a Tuesday note, pointing to consumer confidence levels that “shockingly” hit their lowest level in a decade last week as a reminder of the “real risk” the economic recovery slows meaningfully due to the pandemic’s resurgence in the United States.
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