The term "stagflation" refers to an economic condition characterized by slow economic growth, relatively high unemployment, and rising prices (inflation). It presents a unique challenge for policymakers, as measures to combat inflation (e.g., raising interest rates) can further slow economic growth, while efforts to stimulate growth (e.g., lowering rates) can exacerbate inflation.
While Federal Reserve Chair Jerome Powell previously stated that the Fed does not expect the US economy to undergo stagflation, the central bank has been monitoring conditions, especially after cutting growth forecasts while lifting inflation projections in a past period.1 Some analyses from early 2025 also highlighted the potential for the Fed to face a "scenario of stagflation amid rising oil prices".2 Furthermore, a 2025 10-K filing from FatPipe Inc. explicitly mentioned "possible stagflation in certain geographies" as a risk factor, alongside fluctuating interest rates and rising tensions.3
For US equities, a stagflationary environment can be particularly challenging. Slow growth impacts corporate earnings, while inflation erodes purchasing power and can lead to higher input costs. However, certain sectors or companies with defensive characteristics may fare better. For instance, during periods of trade tensions and tariffs, some defensive stocks or companies able to localize production have shown resilience.4
Fintel's platform offers several tools to help investors analyze and potentially navigate such an environment:
- ETF Analysis: The existence of specialized instruments like the "Merk Stagflation ETF" (STGF)5 indicates that institutional investors are considering this economic scenario. Analyzing its holdings and performance can provide insights into strategies for stagflation.
- Inflation-Protected Securities: Fintel tracks various inflation-protected funds and indices, such as Deutsche Global Inflation Fund (TIPIX),6 First American Inflation Protected Securities Fund (FRIPX),7 Fidelity Inflation-Protected Bond Index Fund (FIPBX),8 and Schwab Treasury Inflation Protected Securities Index Fund (SWRS.X).9 These can serve as gauges of market expectations for future inflation.
- Institutional Ownership: By examining 13F and NPORT filings, investors can observe how major institutions are adjusting their portfolios in response to economic outlooks, potentially identifying shifts towards defensive assets or sectors perceived to be more resilient to stagflation.5 The Fund Sentiment Score can also highlight accumulation trends.
- SEC Filings: Company 10-K and 10-Q filings can offer direct insights into how businesses are assessing and disclosing risks related to inflation, economic slowdowns, and potential stagflation.3
Understanding these dynamics and utilizing Fintel's data can provide a more informed perspective on potential stagflationary pressures and their impact on US equities.
