death spiral

The term "death spiral" in economics refers to a situation where something continuously decreases or gets worse. This can manifest as a downward spiral in prices or wages, often leading to a severe economic downturn.1

A related concept is an "inflationary spiral," where rising wages and costs lead to continuous price increases. Conversely, a "deflationary spiral" occurs when falling prices cause people to delay spending, leading to further price reductions, business stagnation, job losses, and decreased demand. Both scenarios can destabilize an economy, making it difficult for consumers and businesses to plan and invest.23