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What is stagflation, and might it make a comeback?

A combination of inflation and sluggish growth brings memories of the 1970s

Applicants register their choice of the jobs on offer at the Self Service Job Centre of the St Marylebone Employment Exchange, which recently opened in London, 26th June 1972. (Photo by Brian Harris/Fox Photos/Getty Images)

Sep 6th 2022

INFLATION IS RUNNING at around 8% in both America and Europe, far above central-bank targets. Growth is starting to slow down, prompting fears of a recession. That has led to some, including the World Bank, to warn of an old foe: “stagflation”. The portmanteau, a combination of stagnation and inflation, was popularised in the 1970s by Paul Samuelson, a Nobel economics laureate. In America it brings memories of a time when inflation was high, the economy struggled through two recessions and unemployment remained elevated. What leads to stagflation, and to what extent are America and Europe at risk?

This article appeared in the New Articles section of the print edition under the headline “What is stagflation, and might it make a comeback?”