What Is Stagflation and How Can Investors Prepare?

Stagflation occurs when economic growth slows and the unemployment rate spikes and can create a challenging environment for investors.

the word "stagflation" on a computer screen surrounded by economic data points like unemployment
(Image credit: Getty Images)

The 1970s are known for many things, but the one economists are most likely to recall is stagflation, the combination of high inflation and unemployment that can cripple an economy and investor portfolios.

"Stagflation is a serious risk for investors because of its persistence," says Michael Rosen, chief investment officer and co-founder of Angeles Investments. "That is, stagflation is rarely a transitory event and it erodes portfolio values over time, often marked by years." Comparatively, the average length of all recessions since World War II is 11.1 months.

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Coryanne Hicks
Contributing Writer, Kiplinger.com

Coryanne Hicks is an investing and personal finance journalist specializing in women and millennial investors. Previously, she was a fully licensed financial professional at Fidelity Investments where she helped clients make more informed financial decisions every day. She has ghostwritten financial guidebooks for industry professionals and even a personal memoir. She is passionate about improving financial literacy and believes a little education can go a long way. You can connect with her on Twitter, Instagram or her website, CoryanneHicks.com.