Stagflation.
In plain English
Stagflation is a mix of two problems that usually do not appear together: stagnant growth (a weak economy with rising unemployment) and high inflation (prices rising quickly). Normally, weak demand cools prices, so high inflation and high unemployment happening at once is rare and hard to fix. It is hard because the usual tools work against each other. Raising interest rates to fight inflation can slow the economy further, while cutting rates to boost growth can push prices up even more.
01Why it matters
In stagflation you can face a tougher job market and rising prices at the same time, which squeezes households from both sides and leaves policymakers with no easy fix.
02The math, step by step
The classic case in the United States was the 1970s, when oil price shocks pushed prices up while growth stalled and unemployment climbed. Workers found their wages buying less even as jobs got harder to keep.
03What this is NOT
Stagflation is not just a recession. A normal recession usually comes with falling or slowing inflation. Stagflation is rarer and worse because prices keep rising while the economy weakens.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice