Stagnation

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Stagnation

A period of slow economic growth, or, in securities trading, a period of inactive trading.

Stagnation

A period where an economy grows at an extremely low rate without actually entering a recession. During stagnation, it is unlikely that jobs will be created, wages will increase, or that the stock market will boom. While there is no exact definition of economic stagnation, most analysts agree that positive growth under 2%-3% qualifies. It may occur because a business cycle is winding down, because a catastrophic event has caused economic uncertainty, or for any number of other reasons. Classical Keynesian economics states that stagnation will result in a period of low inflation because there is no growth in demand for money, but American stagnation in the 1970s also saw a period of high inflation. See also: Brezhnev Stagnation, Stagflation.

Stagnation.

Stagnation is a period during which the economy grows slowly, doesn't grow at all, or actually contracts after adjusting for inflation. Typically, there is a corresponding contraction in the stock market.

As a result of a slowing economy, unemployment increases and consumer spending slows. Policymakers may fear a recession, and, in response, the central bank may try to stimulate growth by increasing liquidity and lowering interest rates.

While stagnation is hard on the economy, it's more common and potentially less disruptive than stagflation, which combines slowing growth with rising inflation.

stagnation

see SECULAR STAGNATION.