economy
Sometimes an economy delivers the worst of both worlds at once: prices keep climbing even as growth and jobs stall out, defying the usual textbook trade-off.
Stagflation describes the rare combination of high inflation together with slow growth and rising unemployment at once, defying the usual pattern where inflation accompanies a hot, fast-growing economy rather than a stagnant one.
Deflation is essentially the opposite, falling prices rather than rising, and a recession refers to contraction generally, which can happen with or without high inflation, neither term captures stagflation's specific dual bind.
The term became widely known during the 1970s oil-shock era, when spiking energy prices choked growth while prices kept climbing anyway, leaving policymakers a painful dilemma since fighting inflation risked worsening stagnation.
economy
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