The Washington PostDemocracy Dies in Darkness

Opinion Is ‘stagflation’ the appropriate label?

Gas prices are displayed at a gas station in Sacramento on May 27. (Rich Pedroncelli/AP)
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Regarding the June 8 front-page article “World Bank fears a 1970s rerun of global ‘stagflation’ ”:

The term “stagflation,” which indicates a period of stagnation, inflation and high unemployment, doesn’t accurately describe the current state of the economy. More broadly, unemployment, a closely monitored economic indicator, is historically low, and another important indicator, inflation, is at its highest rate in decades.

Perhaps the best way to understand the present phase of the economy is to unravel consumer sentiments. This requires an examination of the relationship that exists between the tolerance of a higher inflation rate by consumers and the historically low unemployment rate. Previously, economists have depicted this as the Phillips curve, named for economist A. William Phillips.

Simply stated, one of the main tenets of the Phillips curve is that levels of unemployment influence the rate of wage increases. More specifically, a low unemployment rate with a low rate of inflation is not easily achievable.

As I see it, “recessflation” is a more appropriate portmanteau to express rising inflation as the economy slumps into a recession.

Mark M. Spradley, Chevy Chase