High inflation is bad enough on its own — but what about when it comes with high unemployment and stagnant economic growth? This pairing is what is known as stagflation, a rare economic phenomenon. And lately, concerns are cropping up that the U.S. economy could be showing signs of it.
“Persistent inflation above the Federal Reserve’s target and the job market slowdown had already prompted worries,” said CNBC. Then “surging oil prices due to the Iran war” entered the equation, bringing to mind the “oil supply shocks that led to shortages and long gas lines Americans saw during stagflation in the 1970s.” Still, many experts, including Federal Reserve Chairman Jerome Powell, maintain that the risks of stagflation reoccurring remain low.
What is stagflation, and why does it happen?
Stagflation — a blend of the words inflation and stagnation — refers to the combination…
