Key insights
- The article discusses the potential consequences of prolonged global economic stagnation or decline, moving beyond investment growth concerns to broader societal crises. It questions whether inflation alone can guarantee market growth and posits that stagnation might equate to economic shrinkage. While the author seeks expert opinions, the piece itself is speculative and does not offer concrete leading indicators for US equity markets, hence a neutral influence score.
When watching personal finance videos I’ve seen commentators claim that if global/US index funds don’t continue growing over the long term then you’ll have a lot more to worry about than investments not growing - aka it would be an event that would cause multiple crises across the world and you’d be worrying about buying fresh water instead of the S&P 500. They use it as a way to reassure long term investors of the security of the market/index funds as a whole.
My question is, what would realistically happen if the world entered a very prolonged period of stagnation/decline? I’ve considered some impacts (for example pension funds would be heavily impacted and countries in high debt would be in substantially more debt), but I’d like people that are more experienced in economics to let me know their thoughts.
Finally, in terms of market growth, would inflation alone guarantee a small but relatively certain increase? In that case would stagnation essentially be the economy shrinking?
Thanks all