4 Signs Stagflation Could Be Coming in 2025

Falling Consumer Sentiment

Next comes falling consumer sentiment, which, yes, we’re also seeing right now in the U.S. as people pull the reins on spending.

“Concerned by the inflationary outcome of the ongoing tariff war, people begin to feel pessimistic about the economy, which leads to reduced spending and investment,” Tsepaev said. “Indeed, retail sales fell 0.9% in May, worse than expected, as consumers reduced their purchases of big-ticket items, such as cars and other luxuries. Likewise, companies become cautious about expanding due to uncertainty or rising costs.”

Diversify Investments With Inflation-Resistant Assets

So how do you fortify your finances to shelter from stagflation? First, double down on your investing strategy. One of the awesome things about investing is that if you do it right and diversify, you can hedge against inflation.

“Consider Treasury Inflation-Protected Securities (TIPS), commodities and real assets like real estate,” Falcon said. “If you are missing these in your portfolio now is a time to get a second opinion.”

Pay Off High-Interest Debt

It’s always the right time to pay off high-interest debt, but there’s nothing like the high probability of stagflation to put the pressure on.

“When inflation increases, the true value of debt goes down,” said Fei Chen, investment expert and founder and CEO at Intellectia.AI. “But interest rates can also increase as central banks attempt to stem inflation, which increases the cost of borrowing. Paying off high-interest debt or fixing rates before inflation spirals out of control can provide some mitigation.”

Stay Informed and Be Flexible

The U.S. appears to be on the precipice of stagflation, but the economy can change rapidly and without notice. It’s important to keep up with the news (calmly and without letting it provoke you to, say, drop an investment without heavy consideration and research) and stay flexible.

“Regularly review your financial plan and adjust as needed,” Falcon said. “Make sure your portfolio is aligned with your financial plan.”

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This article originally appeared on GOBankingRates.com: 4 Signs Stagflation Could Be Coming in 2025