What is stagflation, and might it make a comeback?
A combination of inflation and sluggish growth brings memories of the 1970s
INFLATION IS RUNNING at around 8% in both America and Europe, far above central-bank targets. Growth is starting to slow down, prompting fears of a recession. That has led to some, including the World Bank, to warn of an old foe: “stagflation”. The portmanteau, a combination of stagnation and inflation, was popularised in the 1970s by Paul Samuelson, a Nobel economics laureate. In America it brings memories of a time when inflation was high, the economy struggled through two recessions and unemployment remained elevated. What leads to stagflation, and to what extent are America and Europe at risk?
This article appeared in the The Economist explains section of the print edition under the headline “What is stagflation, and might it make a comeback?”
More from New Articles
Would legal doping change the Olympics?
The impact would be smaller—and worse—than proponents of drug-taking claim
Do vice-presidential picks matter?
If they have any effect on an election’s result, it is at the margins
What led to the bitter controversy over an Olympics boxing match?
A mighty punch by an Algerian boxer has revived a politically charged dispute
Is this the end of Project 2025, the plan that riled Donald Trump?
The right-wing blueprint for governing has taken centre-stage in America’s presidential campaign
Who should control Western Sahara?
France becomes the latest country to back Morocco’s claim
Who are the Druze, the victims of a deadly strike on Israel?
The religious minority has often been caught up in regional crossfire in the Middle East