The global economy is headed for a double whammy of 1970s-style stagflation and a potential timebomb seen in the form of a United States national debt that has raced above $39 trillion and growing, an international financial adviser has warned.
Nigel Green, founder of deVere Group, an independent financial advisory firm which serves over 80,000 clients across 100 countries, providing wealth management, investment, and asset management services, and has more than $14 billion of assets under management (AuM), said in a statement to Business a.m. that households, businesses and investors should brace up for global stagflation as all the signs pointing to the 1970s scenarios are there for everyone to see.
But his stagflation warning comes on the back of private sector output in the euro zone sinking to a 10-month low in March with evidence mounting about how the conflict in Iran involving joint military operations by Israeli and the US is impacting the world’s economy.
“The figures show the severe impact the Iran war is already having on the euro zone economy,” said Green, adding that, “but, like in the 1970s, stagflation could become a widespread global phenomenon characterised by high inflation, low growth, and high unemployment, heavily driven by oil price shocks.”
He explained that back then it hit most developed economies, including the US, Canada, Western Europe, and Japan, largely ending the post-war economic expansion. “It looks like a spectre that may be looming once again,” he stressed.
On a second front the global economy must brace itself for the fallout of the impact of a soaring US national debt that has risen above $39 trillion and is growing.
Green described the US debt as a huge issue no one is talking about, noting that it is a looming problem that could hit markets, borrowing costs, currencies and confidence across the global financial system.
According to him, the US debt situation presents a clear danger, a far bigger structural strain that keeps building in plain sight, but that investors remain fixated on near-term headlines.
The fresh geopolitical turmoil in Iran has added to the pressure, he said, adding that the escalating tensions involving Iran have already unsettled markets, driven oil prices higher and triggered volatility in US Treasuries, exposing underlying fragilities in the system.
“The world’s biggest economy is carrying more than $39 trillion of debt, yet, remarkably, this still doesn’t dominate market discussion in the way it should.
“Too much attention is being given to the next short-term data point and nowhere near enough to the long-term debt burden sitting underneath the entire system,” Green said.
Underscoring the debt situation, official projections underline the scale of the challenge with the US federal deficit expected to remain close to $2 trillion, while annual interest payments are projected to reach around $1 trillion and continue rising sharply in the years ahead.
Also noteworthy is that the overall debt burden is forecast to climb significantly as a share of the economy over the next decade.
Said Green: “Once a country is spending around a trillion dollars a year just on interest, the debt story stops being abstract. It becomes a live market issue. It deserves far more attention from policymakers, institutions and investors than it’s getting today.”
Explaining his concern further, he stated that the size of the debt creates room for doubt as it limits room for manoeuvering, adding that “It leaves the US more exposed to yield spikes, more exposed to external shocks and more exposed to shifts in foreign demand for Treasuries.”
According to Green, it could not be stressed enough how this represents a fundamental issue and not a side story, noting: “It affects how the US funds itself, how markets price risk, how the dollar is viewed, and how investors around the world assess future stability.”
Regarding Europe, recent flash PMI data underscores the shift. Euro zone business activity has slowed sharply, with the headline index hovering just above the contraction threshold at 50.5, down from 51.9 the previous month.
He also noted that cost pressures are accelerating at the fastest pace in more than three years as energy prices surge and supply chains tighten.
“Oil and gas prices are feeding directly into production costs, transport, and ultimately consumer prices. At the same time, demand is weakening,” Green noted, before explaining that, “This combination is toxic. Growth is fading just as inflation is being reignited. Central banks have very limited room to respond effectively.”
Geopolitical risk now sits at the centre of the economic outlook, he stressed, adding that prolonged conflict in the Middle East would sustain pressure on energy markets, while any escalation could trigger further supply disruptions.
Duration he said matters, adding that a short-lived shock is manageable, but a prolonged period of elevated energy prices changes the entire economic trajectory.
He observed that policy makers are already facing difficult trade-offs, adding that raising rates to control inflation risks deepening the slowdown, while cutting rates to support growth risks fuelling further inflation. “Clearly, neither path is straightforward,” Green said.
“Complacency is the biggest risk. Stagflation is not a theoretical scenario; the early signals are already visible in the data,” Green said, admonishing that “investors who act decisively, diversify intelligently, and prioritise real returns over nominal gains will be best positioned to protect and grow wealth in the period ahead.”
On the US debt, Green said markets have become too comfortable with the assumption that the Treasury market will endlessly absorb huge supply without friction, but he noted that recent weeks have been a reminder that this confidence can be tested.
“Any softening in demand matters when refinancing needs are this large and deficits remain this deep,” Green said, advising that investors need to pay closer attention to the interaction between debt issuance, foreign appetite and market liquidity.
“There is a tendency to treat US debt as permanently manageable simply because the market is large and the dollar remains dominant,” said, and warned: “But complacency on this scale is risky.”
