Food and gas prices are slowly rising, yet the economy doesn't feel any better. Many people are probably wondering why a price war isn't starting when goods aren't selling.

The economy faces an extremely troublesome situation where prices continue to rise despite economic stagnation. This is called "stagflation."

This article will explain the meaning and mechanism of this term, why countermeasures are difficult (why the textbook prescriptions of raising interest rates for inflation and lowering them for recession are not feasible), and the nightmare that actually hit Japan and the US in the 1970s—the "Volcker Shock," which ended inflation at the cost of a 23.2% price increase, the first negative growth since the war, and a deep recession.

In the second half, we will examine whether the current Japanese and US economies are experiencing stagflation based on the latest statistics. To put it simply, we cannot say that yet. However, the groundwork is already in place with "expected inflation" that is becoming entrenched after four years of inflation, and wage pressure. The situation in the Middle East has added a spark of tension—we will analyze the current situation using figures for prices, GDP, employment, and real wages.

This is the first installment of our "Explanation of Difficult Terms" series, which explains some of the more complex terms found in economic news.

*Statistics in this video are current as of the time of production.

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📌 What you will learn from this video
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• Introduction – Prices are rising, but the economy is not doing well
• Review of the premise – Inflation and deflation
• The key point of the definition: referring to "continuous" fluctuations
• What is the economy? – Booms, recessions, and business cycles
• The relationship between prices and the economy – Booms tend to lead to inflation
• What is stagflation? – The coexistence of stagnation and rising prices
• The trigger is a supply shock (cost-push inflation)
• However, high oil prices do not equal stagflation
• The key is "expected inflation"
• The danger of the feeling that "today is the cheapest day"
• The cat-and-mouse game between wage increase demands and price pass-through
• Why is it difficult to take countermeasures? – The prescriptions that are blocked
• There are three options – Supply recovery, energy conservation, and the last resort
• [1970s Japan] Runaway Inflation and the First Negative Growth Since the War
• [1970s America] A Decade of Persistent 10% Inflation
• The Volcker Shock—A Painful and Drastic Measure
• [Analysis] Is Stagflation Now?
• America's Current Situation—3.4% Price Increase, Slowing GDP, But Strong Employment
• American Consumption Supported by the "K-Shaped Economy"
• Japan's Current Situation—The True Strength of Prices Hidden by Subsidies
• The Collapse of Domestic Demand Behind Positive Real GDP
• Unemployment Rate at 2.4%, Real Wages Positive for 7 Consecutive Months
• The Embers Still Smolder—A Persistent Inflationary Mindset
• AI Demand: An Unprecedented Variable
• Firefighting Efforts Have Already Begun
• Summary

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🔍 Keywords
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#Stagflation #Inflation #Deflation #Economy #ExpectedInflation #OilShock