Get Ready For "Stagflation Lite" | Cameron Dawson

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**Cameron Dawson** (0:59)
So I think it's an important note that you're seeing things like capex intentions and hiring intentions really diverge at this time. So this stagflation light environment comes with we could actually have resilient real growth as we've actually had through the course of 2025 But the labor market is weakening around the surface or around the edges, and you have that stickiness and inflation, all kind of leads into this stagflation light kind of scenario that probably makes us all want to drink beer.

**Adam Taggart** (1:35)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Signing a current macro landscape of lower economic growth, sticky inflation and rising unemployment, today's guest has recently declared, we've entered a stagflation light period. Well, what does that mean? How long will it last? And how should investors position accordingly? To find out, we're fortunate to welcome Cameron Dawson, Chief Investment Officer of NewEdge Wealth back to the program. Cameron, thanks so much for joining us today.

**Cameron Dawson** (2:05)
Thank you for having me, Adam.

**Adam Taggart** (2:06)
Oh, Cameron, it's always a pleasure. And I looked at the last time you were on the channel, it was earlier this year, quite earlier this year, and thought, you know, it's been way too long. And we know a lot more of the story now here in 2025 that we did at the beginning. There was lots of uncertainty coming in, especially with the new administration. It's not like there's no uncertainty anymore, but we certainly have a little bit more clarity into the policies that are going to be attempted to be pursued and things like that. We've had a gangbuster year in the market. I think that surprised a lot of people off of the back of two back-to-back 20 percent return years in the market. Maybe we'll get another one. Maybe it'll be a three-peat, who knows. But anyways, I did see your recent note there that we may be in a stagflation light period, and so wanted to get you back on, and let's dive into that as well as just everything else about 2025 as we're wrapping up the year. Can you expound on exactly what you mean by stagflation light?

**Cameron Dawson** (3:11)
So stagflation light, we're calling it, doesn't taste great, less filling, which is effectively saying that this is not the stagflation heavy that we got back in the 1970s. If we go to the traditional definition of stagflation, it was that you would get both highly rising unemployment and much weaker real growth at a time where inflation was running hot. That of course was something in classical economic understanding was not supposed to happen. If you saw high unemployment, you're not supposed to see high inflation. But of course, the lesson from the 70s was not only about what happens when you run fiscal policy to lose, when you run monetary policy to lose, but then also how you deal with exogenous shocks. Remember, we had exogenous oil shocks that fed into this inflation scenario, that all wrapped up into this stagflation heavy environment. In the grand debate as to whether or not we're going to have that same environment for the last year or so, we've been saying, no, it's going to be different. It's going to be lighter, meaning that you're going to see some easing in the labor force, but you're not going to see a soaring rate of unemployment necessarily based on what we were saying. We're not calling for a recession. We haven't been calling for a recession, but we've been arguing that inflation is going to be stickier, meaning that you're not going to see the descent all the way to the 2% inflation target. Even if you have potentially exogenous shocks, and we would file tariffs under those kinds of ideas of exogenous shock that really affects supply chains, then you would see a stickiness of inflation persist and even a drifting higher. Maybe not the big spike in inflation like we saw in 2021 and 22, but effectively where you're not in this disinflation scenario. Now, I think this comes with a really, really important caveat because I mentioned at the beginning that stagflation in the 70s came with a time with weak, real growth and soaring unemployment. But there's a very interesting dynamic that's happening today, which is that the employment market is far weaker than what we're seeing within growth in the economy.