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A period of slow economic growth, or, in securities trading, a period of inactive trading.
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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 ?
An economy with a tendency to stagnation is like a leaky tire; it is always in the process of going flat.
In the 1970s the economy slowed down representing a return of stagnation. Full employment production was not approached again for any extended period and the average annual rate of growth of the economy sank by more than a quarter during the last three decades of the century, as compared with the 1960s (chart 1).
history, including 1920-39, which includes the Great Depression and is viewed as the classic period of stagnation under monopoly capitalism.* With economic growth rates only a little above this, Social Security would not be in any peril and would have the funds to cover its beneficiaries indefinitely.
More telling, however, is the fact that if stagnation as deep as the 1920s and 1930s were actually to extend out for decades (with the rate of growth falling to less than 2 percent for most of the century), in conformity with what is considered the best-guess forecast of the Social Security Administration, U.S.
capitalism as a whole would sink into deep, perpetual stagnation and unending crisis and class war, and then, without addressing this larger crisis, present this as simply a crisis of Social Security resulting from mere demographic trends is dishonest to an extreme.
Yet there is a certain degree of realism embodied in these projections to the extent that they do recognize that stagnation is ingrained in the U.S.