Stagflation, explained.
by Eric Levitz
Vox
President Donald Trump’s decision to impose large tariffs on all foreign imports has triggered a global trade war, stock market collapse — and predictions of an imminent recession.
In the wake of Trump’s tariff announcement last week, JP Morgan raised its odds of a US recession to 60 percent, up from 40 percent. Other banks have similarly adjusted their economic forecasts downward.
What makes these forecasts even more disconcerting, however, is that the US is at risk of slipping into an especially dreadful type of recession: one characterized by “stagflation” — meaning, the simultaneous presence of stagnant growth, rising inflation, and elevated unemployment.
Here is a brief guide to what stagflation is, why it’s so feared, how it occurs, and whether Trump’s policies will cause it.