Print ArticleI stumbled across this interesting market phenomenon. I had heard about it but never paid close attention or make a point to research it further until now. Given that the current state of the US economy is in or is headed for a recession, I thought Stagflation would be an interesting topic to research and write on.
Stagflation is an economic phenomenon marked by slow economic growth and rising prices. How is stagflation determined and is it avoidable? It is interesting to see what factors contribute to stagflation. We all should be aware of this and learn how to protect our valuable assets and finances.
There seems to be not one economic measuring tools to watch and gauge stagflation. However, by examining the direction of several indicators over a specific period of time. The movement of a single indicator does not indicate the possibility of stagflation. The indicators that are tracked need to be looked at together in order to see the current state of economic health. When there is an increase in specific indicators over an extended period of time and decline with others creates an environment for stagflation to occur.
What happens
There are multiple thoughts and explanations as to how or why stagflation occurs? Some economists claim that the sudden rise in energy and food costs. Therefore, leading to potential economic troubles. Also, a sluggish economic growth together with a high rate of inflation and unemployment are other factors that can contribute to stagflation. Others might explain claim that high taxes, unneeded regulation of businesses and a constant welfare system that enables people to live comfortably on the government without working.
In the past, the US experienced stagflation in the late 1970's and the early 1980's when inflation was occurring in the double digit rates but unemployment was still a concern. During the1970's we experienced something unusual, both inflation and recession occurred at the same time. This was so unusual that a new term was created and defined "stagflation" . This was the best way to describe the situation that was experiencedHow to protect yourself a solid, long-term financial plan is the best way to protect yourself and your family from the effects of stagflation. Don´t panic and sell your stocks just to invest in oil, gold, or volatile, cyclical securities. Stagflation is not a valid reason to jump ship and revise investment strategy. Maybe if your portfolio is positioned toward aggressive investments or is not diversified, consider re-evaluating your investment strategy and asset allocations. Do the necessary research and rebalance your portfolio.
Stagflation is an economic phenomenon marked by slow economic growth and rising prices. How is stagflation determined and is it avoidable? It is interesting to see what factors contribute to stagflation. We all should be aware of this and learn how to protect our valuable assets and finances.
There seems to be not one economic measuring tools to watch and gauge stagflation. However, by examining the direction of several indicators over a specific period of time. The movement of a single indicator does not indicate the possibility of stagflation. The indicators that are tracked need to be looked at together in order to see the current state of economic health. When there is an increase in specific indicators over an extended period of time and decline with others creates an environment for stagflation to occur.
What happens
There are multiple thoughts and explanations as to how or why stagflation occurs? Some economists claim that the sudden rise in energy and food costs. Therefore, leading to potential economic troubles. Also, a sluggish economic growth together with a high rate of inflation and unemployment are other factors that can contribute to stagflation. Others might explain claim that high taxes, unneeded regulation of businesses and a constant welfare system that enables people to live comfortably on the government without working.
In the past, the US experienced stagflation in the late 1970's and the early 1980's when inflation was occurring in the double digit rates but unemployment was still a concern. During the1970's we experienced something unusual, both inflation and recession occurred at the same time. This was so unusual that a new term was created and defined "stagflation" . This was the best way to describe the situation that was experiencedHow to protect yourself a solid, long-term financial plan is the best way to protect yourself and your family from the effects of stagflation. Don´t panic and sell your stocks just to invest in oil, gold, or volatile, cyclical securities. Stagflation is not a valid reason to jump ship and revise investment strategy. Maybe if your portfolio is positioned toward aggressive investments or is not diversified, consider re-evaluating your investment strategy and asset allocations. Do the necessary research and rebalance your portfolio.
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