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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.


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.


References in periodicals archive ?
Its report, Centres of Excellence - Strategies for Town Centre Prosperity, wants a White Paper for towns and cities to guide urban local authorities and help encourage business to help clear up stagnating town centres.
Imperfect and stagnating market reforms and inflation.
I do not know what the Minister is encouraged from when European Enlargement Commissioner Stefan Fule openly expressed concern that Macedonia is stagnating in many spheres, which were in a progressive phase before," said analyst Semi Mehmeti.
Mr Gill said: "The summit is an emergency meeting to be held in response to the dramatic economic changes taking place, including the credit crunch, falling house prices, stagnating house sales and the property crash.
A WARNING is being given that the much trumpeted EU Objective One programme in North West Wales is in danger of stagnating.
Core industries like health, government, manufacturing, printing, publishing and commercial banking are stagnating.
TOKYO - In its gloomiest assessment of Japan's business climate in more than two decades, the government said the economy is stagnating and it is unclear when growth will resume.
CINCINNATI -- In yesterday's edition of Options 101, we learned how shareholders can protect against a potential pullback in the short term, and possibly generate cash on a stagnating stock, by writing covered calls.
The result is this stagnating economy and increasing unemployment.
Who's going to pay the gains tax -- the borrower who doesn't have any the money or the lender who doesn't feel responsible, is a big issue stagnating many workouts and foreclosure sales, said Jeff Stavin, CPA, Friedman Alpren & Green.