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A period of slow economic growth, or, in securities trading, a period of inactive trading.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
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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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
The coordinator, therefore, advised people, particularly rural dwellers to maintain the culture of keeping the clean environment free of stagnant water.
There are fears the stagnant pools may have been contaminated by sewage, while an influx of mosquitoes, stray dogs and rodents is adding to concerns.
class="MsoNormalSTAGNANT WATER class="MsoNormalAs the workers approached a loose boulder, Ms Gatakaa slipped and fell in a pool of stagnant water and was buried by the debris.
He advised residents in areas of heavy rain to get rid of stagnant water in their environment to help prevent the spread of the mosquito-borne disease.
Malayan Nurses Union president Nor Hayati Binti Abd Rashid said that low wages have created deep impacts across the economy, since stagnant wages lead to stagnant consumption.
The workshop was aimed to make the public aware of the dangers of mosquitoes and how to prevent its increase by getting rid of open stagnant water, in which mosquitoes breed.
Some scientists think Venus, currently a stagnant planet, could hypothetically one day have plate tectonics under the right conditions.
Twitter has faced stagnant user growth, and shares have fallen more than 70 per cent over the past year.
Stagnant incomes are weighing most heavily on those over the age of 50.
Cotton growers should remain vigilant to the adverse effects of stagnant rainwater in the fields.
By Salman Siddiqui/Staff Reporter Last weekend's downpour in Qatar has left many areas in Al Wakrah with stagnant water especially outside residential areas that can pose health risks if proper preventive measures are not taken soon, several residents have said.