Bloomberg Talks JPMorgan Asset Management Chief Global Strategist David Kelly Talks Inflation
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Apr 10, 2025 David Kelly warns that we're in 'the calm before the inflation storm,' expecting an economic slowdown ahead. He notes softness in the travel industry, which may worsen this year. The discussion dives into the relationship between stagnation and inflation, revealing that inflation can precede an economic downturn. Factors like declining labor supply and fiscal issues are explored, alongside their potential implications for U.S. bonds and long-term inflation trends.
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Economic Slowdown and Inflation
- David Kelly observes softness in the travel industry, indicating a potential economic slowdown.
- He anticipates higher inflation due to tariffs but sees a deflationary trend in the current data.
Stagflation vs. Flation Stag
- Kelly emphasizes that stagnation typically follows inflation, not the other way around.
- He anticipates a slowdown due to decreasing labor supply, trade impediments, and reduced government spending.
Investment Advice
- Kelly recommends a level weight in fixed income, citing reasonable long-term interest rates.
- He believes that long-term inflation is not a major concern due to the eventual pullback from tariffs.