Economist Komal Sri-Kumar warned in a recent interview that 2026 would witness an economic crisis not seen in the past 50 years, with only a select group of assets set to withstand it.
Specifically, the President of Sri-Kumar Global Strategies argued in a discussion published on David Lin’s YouTube channel on December 19 that “stagflation” levels not seen since the 1970s are heading our way.
This phenomenon, a combination of higher inflation and a recession, the discussion went, is going to put additional pressure on the economy, in particular the employment rates.
2026 economic outlook
Looking ahead, the economist forecasts inflation above 3% for 2026 and predicts a growing risk of recession due to trade tariffs and weakening demand. Similarly, rising long-term bond yields imply the market is further persistent inflation, even as the Fed cuts short-term rates.
Moreover, the steep yield curve could increase mortgage rates and cause a decline in consumer spending. What’s worse, the Fed’s dual mandate, namely to maintain low unemployment and stable inflation, has increasingly come under scrutiny, so achieving both those goals is more challenging as time goes on.
Adding to the uncertainty, the Fed has signaled a willingness to cut rates even with good employment numbers, citing skepticism over official employment data. Sri-Kumar warned that acting on hunches rather than data could undermine confidence in U.S. monetary policy.
Fiscal policy may exacerbate the problem. Namely, the current deficit, around 6.5% of the total GDP, coupled with tax cuts and spending increases, might continue adding inflationary pressures. Accordingly, Sri-Kumar warned that the situation mirrors the conditions that led to the high inflation of 2020–2022.
Another analyst, Henrikz Zeberg, has echoed this sentiment and raised alarms over the trajectory of the U.S. economy, claiming that the Federal Reserve is overlooking clear warning signs of a sharp downturn.
What assets will perform in 2026?
The interview also touched upon businesses and their mounting challenges, notably artificial intelligence (AI) and automation, which are contributing to permanent job losses, especially for younger workers.
Sri-Kumar thus advised investors to seek safety in, for example, precious metals. Indeed, gold and silver have already surged in 2025 due to inflation concerns and are expected to continue rising, with Sri-Kumar projecting the former could reach $5,000 per ounce by the end of 2026.
Alternative currencies, such as the Japanese yen, are unlikely to serve as safe havens due to limited liquidity, capital controls, and economic constraints, he added. Rather, investors should look into assets such as real estate.
Sri-Kumar ended by noting that all the makings of stagflation are present, and that the crisis will affect everyone from consumers to investors as trade wars remain a dominant theme in 2026.
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Source: https://finbold.com/economist-predicts-worst-crisis-in-50-years-in-2026-heres-what-assets-will-survive/
