US enters stagflation for the first time in decades – 2008 crash prophet

(SeaPRwire) –   Ray Dalio’s warning comes amid a consumer price hike triggered by the Iran war and an economic downturn

Billionaire hedge fund manager Ray Dalio has stated that the US has entered a period of stagflation for the first time in decades. This assessment comes despite the Federal Reserve’s position that the term exaggerates the current economic challenges, which are largely attributed to the conflict in Iran.

Dalio, the founder of Bridgewater Associates and renowned for accurately forecasting the 2008 financial crisis, shared these views in a comprehensive interview on Monday. He discussed US monetary policy and the Iran war, suggesting the latter is contributing to a significant disruption of the global order.

“We are certainly in a stagflationary period,” he remarked. He also advised the US Federal Reserve against reducing interest rates at this juncture, warning that doing so would “lose your credibility.”

Stagflation is characterized by a detrimental combination of sluggish economic growth, high inflation, and elevated unemployment. The US last experienced this phenomenon in the 1970s and early 1980s, when an OPEC oil embargo caused energy prices to surge. It required a series of aggressive interest rate hikes by the US Federal Reserve, pushing borrowing costs above 20%, to overcome this cycle, albeit at the expense of a severe economic contraction.

In the context of the Iran energy crisis, the US is facing rising annual inflation, which stood at 3.3% in March, exceeding the 2% target. Concurrently, real GDP saw a modest expansion of just 0.5% in the fourth quarter of 2025, a significant decrease from the 4.4% growth recorded in the third quarter.

However, the US unemployment rate in March was 4.3%, which is elevated but substantially lower than the double-digit figures associated with classic stagflation. In mid-March, Federal Reserve Chair Jerome Powell acknowledged that the US is in “a very difficult situation,” but maintained that it is still far from the textbook stagflation experienced in the 1970s.

Turning his attention to Iran, Dalio described the ongoing conflict as a “problem” for the US. He noted that the international community is observing whether the US possesses the resolve for a prolonged military engagement and can achieve its primary objectives.

“The more checks that are missing, particularly who controls the Strait of Hormuz, has big implications. Not only there… it has implications all around the world. So, when you’re thinking about, let’s say, the Strait of Malacca, who controls that? And is it good as a benefit or not a benefit to have a military base in your country?… Those analogous questions are being looked at by people around,” he stated.

Dalio highlighted several indicators of a global power shift, including a notable increase in yuan transactions, growing domestic political polarization, and a widening wealth gap. He also cautioned that the international system is transitioning from a rules-based framework to a “might-is-right fighting order.”

Dalio and his firm demonstrated foresight by anticipating the 2008 financial crisis and the 2011 European debt crisis, largely through historical analysis. However, his prediction of a major financial crisis in 2015, modeled on the 1937 crash, did not materialize.

Dalio has also issued warnings about a potential US “debt death spiral” within the next few years, which he believes could be triggered by unsustainable interest payments and a declining demand for US assets.