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Stagnation


Stagnation is an extended period of low or no growth in an economy or industry, such that total economic output is either declining, flat, or growing slowly. Stagnation is considered to be occurring when real economic growth is less than 2% annually, and it is often accompanied by periods of high unemployment and involuntary part-time employment. When stagnation occurs, job growth is typically low or flat, wages do not increase, and the stock market is flat or grows slowly.

Economic stagnation can occur due to cyclical stagnation, economic shocks, or structural stagnation. Cyclical stagnation is a temporary, normal condition of the business or economic cycle. Economic shocks, such as the OPEC oil crisis in the 1970’s, are specific effects that cause either short-term or long-lasting economic impacts. Structural stagnation is due to political, economic, or social structures that are preventative to economic growth. Stagnation can occur on a macroeconomic scale or in specific industries. Stagnation is most commonly a temporary condition that has occurred in most countries from a long-term macroeconomic viewpoint.