1970s: Stagflation

Let’s rewind to 1965 in the UK, how the term “stagflation” was coined, and the global spread.

Stagnant combined with the world inflation resulted in “stagflation” when a British politician described a slow economy also suffering from high inflation rates

Stagflation spread globally and landed especially hard in the US

Consumers lost interest in foreign goods and business owners had trouble restocking right after a strong holiday season

Economists had previously assumed that inflation would only exist when the market was strong and unemployment was low

Stagflation resulted in a dilemma because efforts to reduce inflation could increase unemployment and further slow economic growth

Stagflation only ended after a recession and more controls over spending

Test your knowledge

Stagflation is. . .

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Stagflation is difficult to solve because. . .

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Which of the following did not contribute to stagflation?

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What's next?

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