The Stagnation Phenomenon

In this uncertain economy, a lot of people are starting to worry about the future of the country, of what we’re going to be facing down the road. If you remember the late 1970′s, you may be worried about the return of stagflation that may go along with a foundering economic growth rate and the increasing price of petroleum. If you don’t remember the late 1970′s, then you may be interested in learning about the economic phenomenon of stagflation and how it could affect you in the near future.

What Is Stagflation?

Stagflation is a combination of the economic terms stagnation and inflation. In stagnation, a society suffers from a long-term decrease in economic growth, usually seeing less than 3% growth annually. Recessions and depressions usually exhibit stagnation. Inflation, on the other hand, is marked by a rapid decrease in the purchasing power of money. For years, these two phenomena were believed to be polar opposites, that if one was happening then the other could not be.

However, as we’ve since learned, they are independent of one another, and while they usually don’t occur simultaneously, they certainly can. Stagflation is marked by both slow economic growth and rapid inflation, and can be an extremely hard condition to get out of. It is usually caused by the sudden scarcity of a vital commodity, which in turn causes industry to slow. For example, in the 1970′s, petroleum and other forms of energy became suddenly much scarcer and therefore expensive, and industry slowed dramatically as a result.

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If the worsening economy is leading you to consider bankruptcy as a solution to your financial woes, contact the West Palm Beach bankruptcy attorneys of Eric N. Klein & Associates, P.A. by calling 561-353-2800 today.