What is stagflation? Stagflation is like an imperfect storm, a weather happening with lots of contributing factors. Stagflation is an economic condition caused by a combination of increasing inflation and high unemployment rates, which cause a decrease in consumer demand for goods and services.
In a good economy, there’s a balance, where slow steady economic growth is in step with consumer demand. With Stagflation, the economy is out of balance in a bad way.