Stagnation

AAA

DEFINITION of 'Stagnation'

A prolonged period of little or no growth in the economy. Economic growth of less than 2 to 3% annually is considered stagnation. Periods of stagnation are also marked by high unemployment and involuntary part-time employment. Stagnation can also occur on a smaller scale in specific industries or companies or with wages.

INVESTOPEDIA EXPLAINS 'Stagnation'

In late 2012, supporters said the Federal Reserve's third round of quantitative easing was necessary to help the United States avoid economic stagnation. The central bank's proposed asset purchases of mortgage-backed debt were expected to foster economic growth, bolster the housing market and improve employment prospects. The Fed also kept interest rates low as part of its plan to prevent stagnation.

RELATED TERMS
  1. Eurosclerosis

    A term introduced by German economist Herbert Giersch referring ...
  2. Recession

    A significant decline in activity across the economy, lasting ...
  3. Inflation-Indexed Security

    A security that guarantees a return higher than the rate of inflation ...
  4. Disinflation

    A slowing in the rate of price inflation. Disinflation is used ...
  5. Inflation

    The rate at which the general level of prices for goods and services ...
  6. Deflation

    A general decline in prices, often caused by a reduction in the ...
RELATED FAQS
  1. What country has the richest middle class?

    For decades, the United States boasted the honor of having the richest middle class. However, as of 2015, Canada has the ... Read Full Answer >>
  2. When has the United States run its largest trade deficits?

    In macroeconomics, balance of trade is one of the leading economic metrics that determines the trading relationship of a ... Read Full Answer >>
  3. Which is more important to a nation's economy, the balance of trade or the balance ...

    There is no question the composition of a country's balance of payments is more important than its balance of trade. This ... Read Full Answer >>
  4. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
  5. How can tariffs cause inefficiencies in domestic industries?

    Any government regulation naturally creates inefficiencies in a pure supply and demand marketplace. When it comes to the ... Read Full Answer >>
  6. What is the correlation between inflation and interest rate risk?

    There is a positive correlation between inflation and interest rate risk. Inflation basically occurs when there is too much ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    Coping With Inflation Risk

    Inflation is less dramatic than a crash, but it can be more devastating to your portfolio.
  2. Entrepreneurship

    Cost-Push Inflation Versus Demand-Pull Inflation

    Gain a deeper understanding of aggregate supply and demand, forces which raise the price of goods and services.
  3. Forex Education

    The Fundamentals Of Forex Fundamentals

    Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators.
  4. Forex Education

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  5. Economics

    An Explanation Of Stagflation

    Find out how stagflation is measured, what factors contribute to it and how to protect your finances.
  6. Retirement

    Inflation-Protected Annuities: Part Of A Solid Financial Plan

    If you worry about inflation and longevity risks, this may be the investment for you.
  7. Investing

    Impact of the Chinese Economy on the U.S. Economy

    The economic growth of China has been decreasing since 2010. What impact does this have on the US and the world economy?
  8. Economics

    How Does China Manage Its Money Supply?

    Here's how the Central Bank of China manages its currency rates and the money supply.
  9. Economics

    What Happens to the Economy If China Deleverages

    Attempts to deleverage and institute reforms that will foster more sustainable growth could exacerbate an already slowing Chinese economy.
  10. Economics

    Do Transport Stocks Signal a U.S. Selloff?

    The Dow Jones Transportation Average index has underperformed the broader DJ Industrials Average, leading some market watchers to speculate a selloff.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!