A trader is not amused by what he sees on the floor of the New York Stock Exchange. © 2018 Bloomberg Finance LPKey FactsAfter closing at a record high Monday, the Dow Jones Industrial Average fell 490 points, or 1.4%, to 35,135 on Tuesday afternoon after the Census Bureau reported consumer spending fell 1.1% from June to July as online spending and car purchases slowed more than expected. In another warning sign of stagflation, Essaye says the New York Fed’s Empire Manufacturing Index “offered a similar take on the economy” on Monday, showing a sharper than expected decline in manufacturing activity last month while prices paid by consumers actually rose. Key BackgroundStagflation is often associated with lackluster economic growth and runaway inflation—largely driven by “sky-high” energy prices—in the 1970s, Zabicki wrote in a Friday note. That decade, yearly inflation averaged 7.4% (compared to 5.4% in July), and the S&P averaged a meager return of less than 2%.

Source: Forbes August 17, 2021 16:59 UTC