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A steady increase in GDP price index and a steady decline in Real GDP over the last six months show stealth stagflation – the worst nightmare for stock market
Fred Day
Jun. 28, 2007
The data tells it all. You can see it if you are to analyze it. Otherwise, the stealth deflation is hidden under a rug, but ready to bite at your retirement funds invested in the stock market.
The Real GDP data for previous quarter is slowly and steadily coming down from 3.5 in January 2007 to less than 1.0 as of today. At the same time, the corresponding GDP price index has climbed from 1.5% to approximately 4.0% during the same period.
It looks like stagflation. It smells like stagflation, and it is stagflation. The Federal Reserve is still unwilling to call it stagflation, but you should be careful. Stock markets decline over long terms in an economy plagued with stagflation.
Stagflation is the worst nightmare of the stock market. It can slowly and steadily wipe out your portfolio over the long run.
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