Stagflation is a portmanteau combining the words stagnation and inflation. It describes an economy with little to no growth and higher than normal inflation rates. Iain Macleod, a British politician, coined the term in 1965. Initially, many economists doubted stagflation was possible. Normally, unemployment and inflation move in opposite directions, since price levels are usually driven by an economy’s level of demand.
If 2020 was a year for worrying about pandemic-induced economic collapse and the first half of 2021 was a time for worrying about post-pandemic inflation, for a growing number of traders the new cause of anxiety is a word that hasn’t been heard much since the 1970s: stagflation.
1. What is stagflation?
