Stagflation

Amid the current COVID-19 crisis, many people worldwide are worried. There is so much unknown – will I be laid off, will the company for whom I work go out of business, when will businesses reopen, how will I make enough money to survive, how will I make money, and the list goes on.

Economists are beginning to theorize what the short and long-term impacts of the worldwide shutdown will be on the world’s economy and how long and by whom these impacts may be felt.

Many are indicating that we are headed to a Stagflation. This is when the economy experiences a high inflation rate, the economic growth rate slows down, and the rate of unemployment remains steadily high. This scenario presents a challenge for those responsible for developing economic policy, since actions intended to lower inflation may exacerbate unemployment.

This does create a favorable market for businesses – established and start-up businesses alike. Additionally, this type of market creates conditions under which starting a small business might be a wise choice.