What is Stagflation? An Inflation Explained Video

Video summary

This video explains stagflation, when high inflation occurs alongside a weak economy and high unemployment, with examples from US history.

Full transcript

What is stagflation? Typically, high inflation tends to occur alongside a strong economy and low unemployment. When the economy is weak and unemployment is high, inflation is usually low. This relationship is known as the Phillip’s curve. However, sometimes that is not the case.  When there is a combination of relatively high inflation and a very weak economy, economists typically call this “stagflation.” Precise definitions vary, but here in the US, it is safe to say we experienced two bouts of stagflation during the 1973 to1975 and 1980 recessions, when inflation was above 10 percent even as the unemployment rate was high and rapidly rising. With the recent increase in inflation, people have questions about inflation, stagflation, and more. Check out the Cleveland Fed Center for Inflation Research to better understand inflation and how it affects you and our economy.