stagflation

References

stagflation

economics

Also known as: recession-inflation

Written by

The Information Architects of Encyclopaedia Britannica

Last updated

June 30, 2026

Quick Summary

Stagflation is an economic condition characterized by persistent inflation, stagnant consumer demand, and relatively high unemployment. This "double whammy" of economic woes combines sluggish economic growth with escalating prices, creating a challenging situation for policymakers.12

The term "stagflation" is a blend of "stagnation" and "inflation". It deviates from the typical economic understanding where inflation is usually associated with economic booms and low unemployment, while economic slowdowns lead to cooling prices.12

Historically, stagflation has been uncommon. A notable period of stagflation occurred in the 1970s, affecting many Western economies. Factors contributing to this included oil price shocks, such as the 1973 OPEC embargo, and prolonged loose monetary policies. Addressing stagflation often requires painful measures, such as significantly high interest rates and unemployment, and its causes and cures remain subjects of debate among economists.2

Summary created from Britannica articles using AI. AI can make mistakes, so verify using Britannica articles.

4 Britannica Sources

Ask Britannica AI about this topic

Britannica doesn't have a full article on this topic, so we've curated a list of our relevant coverage.

political economy
National and comparative political economy
…however, many Western countries experienced “stagflation,” or simultaneous high unemployment and inflation, a phenomenon that contradicted Keynes’s view. The result was a revival of classical liberalism, also known as “neoliberalism,” which became the cornerstone of economic policy in the United States under President Ronald Reagan (1981–89) and in the United…
Read More
…however, many Western countries experienced “stagflation,” or simultaneous high unemployment and inflation, a phenomenon that contradicted Keynes’s view. The result was a revival of classical liberalism, also known as “neoliberalism,” which became the cornerstone of economic policy in the United States under President Ronald Reagan (1981–89) and in the United…
Read More

United States
The Gerald R. Ford administration
…inflation and recession, called “stagflation,” and Congress had no remedies either. For the most part Congress and the president were at odds. Ford vetoed no fewer than 50 bills during his short term in office.
Read More
…inflation and recession, called “stagflation,” and Congress had no remedies either. For the most part Congress and the president were at odds. Ford vetoed no fewer than 50 bills during his short term in office.
Read More

Fordism
From origins to crisis
…declining profit rate coincided with stagflation; a fiscal crisis developed; internationalization made state economic management less effective; clients began to reject standardized, bureaucratic treatment in the welfare state; and American economic dominance and political hegemony were threatened by European and East Asian expansion. These phenomena prompted a wide-ranging search for…
Read More
…declining profit rate coincided with stagflation; a fiscal crisis developed; internationalization made state economic management less effective; clients began to reject standardized, bureaucratic treatment in the welfare state; and American economic dominance and political hegemony were threatened by European and East Asian expansion. These phenomena prompted a wide-ranging search for…
Read More

Milton Friedman
Challenging Keynesian economics
The stagflation of the 1970s (literally, a combination of economic stagnation and inflation), impossible in a simplified Keynesian framework, was seen by many as confirmation of Friedman’s hypothesis. In any event, it marked the end of the dominance of the Keynesian model in macroeconomics. Although Keynesianism…
Read More
The stagflation of the 1970s (literally, a combination of economic stagnation and inflation), impossible in a simplified Keynesian framework, was seen by many as confirmation of Friedman’s hypothesis. In any event, it marked the end of the dominance of the Keynesian model in macroeconomics. Although Keynesianism…
Read More