When inflation joins forces with stagnant economic growth and adds a side of high unemployment, the result is stagflation. Here’s what you need to know about this economic quicksand.
Just over a month ago, economists were so frightened of a potential recession they refused to call it by its name. The dreaded R word kept the financial punditry quaking in their boots on news shows—which feels a bit quaint now that we’re seeing signs of a possible stagflation on the horizon.
Despite sounding like Yosemite Sam’s reaction to setting his drawers on fire, stagflation is just about the worst possible economic condition. As a portmanteau of “stagnant” and “inflation,” this kind of recession hits us with the triple threat of sluggish economic growth, rising inflation, and high unemployment rates.
