What is this China Stagflation Thing? An Explanation of U.S. Stagflation

Economists are talking about some indicators that China may move into stagflation What is stagflation? Stagflation occurs when there is little productive growth but rising inflation. Stagnation + Inflation = Stagflation. While we don't know if these issues will hit the U.S. after China we do know that the pandemic will rewrite many of the economic books (virtual adaptations to a physical ailment. It will take a few years for researchers to sort of grasp the shift.). Understanding how stagflation works will help companies hedge their options.

The term stagflation was originally coined by a British politician Iain Macleod in speech to Parliament in 1965. It occurs when prices are rising but there are less products available. It often impacts employment, interest and a number of different factors that can put a country in free fall. There are not a lot of great tools for dealing with such situations.

We forgot about stagflation until recently where it recently became a possibility again. You can read a study that looks at U.S. stagflation from 1975 to 2013 'From the Stagflation to the Great Inflation:Explaining the US economy of the 1970s'. The researchers found by looking at and analyzing the key macroeconomic literature pertaining to the time period that Supply-shocks and inflation inertia were seen as the major mechanisms underlying the stagflation (Goutsmedt, 2020).