Personal Wealth Management / Economics

Fisher Investments’ Founder, Ken Fisher, Answers Your Questions on Deflation, Recessions and More

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher answers viewer mailbag questions about recessions, stagflation, deflation, and more. To begin, Ken says the US is unlikely to experience a prolonged period of economic stagnation. According to Ken, the US economy thrives on innovation and doesn’t have the demographic and cultural barriers to growth seen in countries like Japan. For the same reasons, stagflation, a period of both high inflation and economic stagnation, is not a likely scenario.

Ken then explains the difference between deflation and disinflation. Deflation is a fall in the overall level of prices in an economy, which can impact consumer demand significantly as consumers postpone purchases continuously anticipating lower future prices. Disinflation refers to a slowing in the rate of inflation—prices continue to grow, but at a slower pace. Following a spike in inflation, central banks implement policies to target an inflation rate of about 2%—not a negative rate. Lastly, Ken speaks to the idea that a recession in the near future would be widely anticipated, neutralizing most of its effects because companies and people have had time to prepare. While a recession is possible, it is unlikely to be as severe as many investors may fear.



Title screen appears, “Fisher Investments’ Founder, Ken Fisher, Answers Your Questions on Deflation, Recessions and More”


[No music]


Title screen appears, “Ken Fisher’s Listener Mailbag”

A banner identifies him as Ken Fisher, Executive Chairman and Co-Chief Investment Officer, Fisher Investments.

Ken Fisher doing hand gestures with paper messages in his hands time to time explaining and reading questions.

And each time he reads a question a green screen shows up with the question written.


Ken Fisher: If we have a recession ahead, which we may, it will be the most widely anticipated and longest anticipated recession in modern history. People are always asking questions and so I thought I'd take a moment to answer a few of them. My age without my glasses on. I can't see beans from bananas, so I got to put them on these big cards here, begin to feel like I'm Johnny Carson or something. But let me just rattle through a couple of questions, a couple of fast answers. If Japan can have a lost decade, why can't we?

Ken Fisher: Well, we could, but we'd have to have the same kind of circumstances that they had and we don't.

Ken Fisher: So, in the period that's ahead for the next decade or so, we won't. The fact is, their world suffered demographic problems that the rest of the world doesn't so much have. They got a very population skewed away from prime working age. They aren't as entrepreneurial as the American economy by far, or as innovative. And from that, the fact is we just naturally grow better than did they and then we don't have the hugely overwhelming negative excessive valuations that they had as they started that period.

Ken Fisher: What about deflation or stagflation? Please put a light on it. Well, the fact of the matter is we don't much really do deflation in our world. The fact is there is some ongoing political pressure to keep the quantity of money growing enough that you have no deflation. Deflation being defined as over time, the Consumer Price Index actually going down, the central bank in America, the Federal Reserve, and most central banks aren't even looking for that. They're not thinking about they're not wanting that. They're wanting something that looks like maybe 2% a year inflation. 2% a year inflation in the long term builds up. But it is a little bit of inflation that's what they want, not actual deflation.

Ken Fisher: They want from here where we are disinflation to get them down to that low level. Disinflation meaning inflation falling down to that level, not actually going to absolute falling prices of yester-year. On stagflation, the one has really nothing much to do with the other. Stagflation doesn't really have much to do with deflation. Stagflation is where you have inflation and along period where we can't grow. Again, this means mostly that something like regulations or other cultural restrictions stop the innovative process from being able to create growth and therefore that stagnant economy over some long period of time. That also is very unlikely to happen in a world where venture capital is abundant, companies are started all the time, trying to do the next crazy new thing and nine out of ten of them fail. But one out of ten of them works and that creates all kind of growth.

Ken Fisher: It seems like media's new obsession or next shoe to drop is falling earnings. Wondering your thought on earnings and if you perceive them to be rolling over. Well, if you think we've got a recession, they're rolling over. If you don't think we've got a recession, they're not.

Ken Fisher: My view is it's at worst a mild recession ahead. Maybe no recession at all. I will say to you that what corporate management tends to do overwhelmingly. It's a well understood game. That for a well understood game not everybody seems to understand. They regularly talk down expectations for how they'll do ahead, so that when they actually report results, they can exceed expectations and can brag about exceeding expectations. That's what you should expect. You should expect them to talk down earnings media to say, see, look at what's going on with earnings, and then watch the earnings exceed expectations. I'm going to tell you that normally they're exceeding expectations 70% to 85% of the time in good times and bad, and I expect that will happen in the period ahead.

Ken Fisher: Do you think this will be a light recession? Because of the majority of companies are expecting a recession and have started to pair, it seems like the worst recessions are the ones we do not see coming. Let me just say that in my lifetime, 50 years as a professional investor plus, it has always been true that we don't see recessions coming. Recessions have always been a surprise. If we have a recession ahead, which we may, it will be the most widely anticipated and longest anticipated recession in modern history, in the history where we can actually measure things in those ways with some accuracy. The fact is, as I've said in my New York Post column, anticipation is mitigation.

Ken Fisher: When CEOs and people see risk ahead, they get themselves ready. They try to prepare for the tougher times they fear. So that process mitigates. Normally, a recession is all about correcting the excesses of the past from ones that were built during the prior bull market and economic expansion, and the recession cleans those out. When we have this rare occurrence where a recession is expected, businesses start doing that. You've got a huge number of layoffs that have already occurred. You've got all kinds of companies that have frozen employment. Meanwhile, the economy keeps growing slowly and the signals are mixed. I will tell you that all of the traditional tells that always used to work for predicting recession, they all say, we're going to have recession. The fact of the matter is, I don't think most of them apply today the way they once did, because today everybody can see them on their iPhone.

Ken Fisher: The fact is, when I was young, you wanted to see what the leading economic index said. You had to go dig out data in a library or someplace like that. If you wanted to know about PMI, almost no one did. Purchasing manager indexes, things like the yield curve inversion. When I was young, nobody understood the yield curve inversion was an indicator of recession ahead. Now everybody does. And I believe for reasons I've explained many times, many places that it's lost its power completely. But you take the leading economic index, which used to be very powerful when I was young and I was on record saying that I love it doesn't have the power you'd think it has because it's about the manufacturing side, not the services side. And the services side today is twice the size of the manufacturing side. It doesn't tell you anything.

Ken Fisher: I think we'll have a mild recession if we have a recession at all, because anticipation is mitigation. We had two quarters, the first two quarters of 2022 that were negative in GDP, albeit only this much and much of it for technical reasons. And starting back then, everyone was afraid we were going into recession right away, and businesses started moving toward preparing. Then as the year went on, recession expectations have gone now to all-time highs. And because recession expectations are at all-time highs measured various ways, everybody under the sun is preparing. Preparation is mitigation. Anticipation is mitigation. Preparation is really blessed because it cleans out the problems that normally you clean out inside the recession, not beforehand, making the recession either go away or be more mild than it would be otherwise. Thank you very much for listening to me.


A green screen appears with the sentence “Ask your Questions Here:”

Underneath it the contact information of social media.

Instagram: KenFisher_Fisher Investments

Twitter: Kenneth L Fisher

LinkedIn: Ken-Fisher




Ken Fisher finished talking, and a white screen appears with a title “Fisher investment” underneath it is the red YouTube subscribe Button.


Other Male Voice: Subscribe to the Fisher Investments YouTube channel if you like what you've seen. Click the bell to be notified as soon as we publish new videos.


A series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of Fisher Investments or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.



Image that reads the definitive guide to retirement income

See Our Investment Guides

The world of investing can seem like a giant maze. Fisher Investments has developed several informational and educational guides tackling a variety of investing topics.

A man smiling and shaking hands with a business partner

Learn More

Learn why 150,000 clients* trust us to manage their money and how we may be able to help you achieve your financial goals.

*As of 3/31/2024

New to Fisher? Call Us.

(888) 823-9566

Contact Us Today