Hand turning letter blocks between "INFLATION" and "STAGNATION"

Asset Management Firm BlackRock Warns of “Full-Employment Stagnation.”


Written by Angela Roberts

Aug 17, 2023

On August 14, 2023, BlackRock, the world’s largest asset manager, released a two-part blog titled “No take-off, no landing—a tale of two unprecedented shocks.” In it, writers Jean Boivin and Alex Brazier, head and deputy head of the BlackRock Investment Institute, respectively, discuss how the United States may be headed for another round of high inflation in 2024 and what factors may contribute to a “flatline” in economy growth.

It may be time to ask ourselves: Are our portfolios prepared for a “no-landing” economy?

According to BlackRock, a constrained workforce may contribute to a “no-landing” economy.

Stacks of coins behind economic data chart

We’ve heard about the debate between a “soft landing” and “hard landing” when it comes to inflation—in essence, what the impact on our economy will look like when the Federal Reserve finally manages to get inflation down to their 2% goal. But what if that doesn’t happen at all? That’s the suggestion of a “no-landing” economy.

According to the blog published by BlackRock, this is the reality we may be facing, thanks in part to what the blog calls a “structural shift” in our economy, where the size of America’s workforce will grow more slowly than in the past because of baby boomers’ aging into retirement. This, in turn, could lead to what the blog calls “full-employment stagnation,” where labor shortages contribute to weakened economic growth and rising inflation.

For me, building a portfolio (and a retirement) is a big-picture issue. While I always keep my ear to the ground and my eyes on financial headlines, I want to make sure that I consider as many facts as possible and remember that what I’m looking for in my portfolio is long-term stability and growth. Understanding any sort of structural shift, like one that comes from the baby boomer generation heading into retirement, is incredibly beneficial—as is understanding the possible ramifications of that shift.

This could lead to what BlackRock is calling a “rollercoaster ride” of inflation.

Red and green arrows crisscrossing in front of stacks of coins

While inflation has been slowing down, we’ve all felt its effects over the last couple of years. Higher prices on consumer goods, including everyday staples like food, have forced many Americans to reevaluate their buying habits. As the spending power of the dollar is reduced, it’s also impacted how far our retirement savings will go in the future.

If this period of “full-employment stagnation” is going to occur as BlackRock’s analysts predict, we’re about to see another year of little to no economic growth, followed by another rise in inflation rates in 2024. In other words—we’ll see another period where our dollars quickly lose more of their spending power.

One way to help protect your savings is by converting some of your cash into assets that have historically held onto their buying power—like physical gold.

Every day, our Account Executives speak with U.S. Money Reserve customers worried about the spending power of their cash. They see news concerning de-dollarization around the world and watch as inflation chips away at what their hard-earned dollars can buy.

Gold, on the other hand, has historically held onto its purchasing power. This is why it is often looked to as a hedge against inflation and other factors like market volatility or geopolitical uncertainty—when cash or other paper-based assets like stocks look too volatile, many see gold as a more stable option for a store of wealth.

This is also true in the long term, which is why our precious metals IRA division continues to grow, helping Americans benefit from the kind of protection that physical gold and other precious metals can bring to a retirement portfolio.

If inflation is preparing to rear its ugly head once again, now may be the time to take action and gain an additional level of protection to your portfolio. To learn more about the benefits of owning physical gold or how you can transfer existing retirement funds into a new precious metals IRA backed by physical gold, give us a call today.


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