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June 09, 2006


You've likely heard the terms "inflation" and "deflation." But what about "stagflation"? N.C. State University economics professor Mike Walden explains the term -- and why it's popping up in economy discussions these days.

"Stagflation was actually in vogue … in the 1970s and 80s," says Dr. Walden, of the College of Agriculture and Life Sciences. "It’s really the worst of all economic worlds because it combines slow or no growth in the economy -- that’s translated into stagnation -- which means incomes are not going up and jobs are harder to find. But … added to that is rapid increases in prices, or inflation.

"So you put the two together –- stagnation of the economy and inflation of prices -- and you get stagflation, and we had this unfortunately in the 1970s and the early part of the 1980s.

"People might recall hearing about something called the misery index, which was developed really to measure stagflation. And this has come back again.

"Some economists are talking about this because there is a concern that we may see a cooling off in the economy but at the same time we are obviously having increases in prices -- a lot of that energy related.

"And so some are concerned about whether we could have at least a mini version of stagflation"

Posted by deeshore at June 9, 2006 08:00 AM