Stagflation: What is it and Should You Be Concerned?
Over the past few days, I’ve talked to you a little bit about the possibility of recession and what the effects of inflation will be in the near future. Is our economy in trouble? With everything that is going on right now, one of the biggest threats is stagflation, and it has been looming over our heads for quite some time.
What is stagflation anyway?
I’m going to tell you everything you need to know about what it is and what we can expect for the future.
Stagflation, in simple terms, is when the inflation rate is high, while the economic growth rate slows down and while the country’s unemployment remains high. This becomes a huge issue for the economy, as actions needed to lower inflation could actually make unemployment worse.
So, you see, it’s a bit of a unique concern.
Especially now when we’re facing a potential stagflation, the likes of which haven’t been seen since the 1970s. So, what’s going on now? Well, we have soaring consumer prices, supply chain shocks, rising energy costs and a Federal Reserve that just wants to do whatever it takes to get inflation under control.
In the 70s and 80s, oil prices, high unemployment, and the easy monetary policy pushed the consumer price index to 14.8%. This forced Federal…