Tuesday, May 12, 2025
Every now and then, a word from the past sneaks back into the headlines and makes you do a double-take. Stagflation is one of those words.
If you lived through the 1970s, you probably remember hearing it on the evening news. If you’re younger, it might sound like something from a history book—one of those “bad economy” terms we learned to avoid. After all, we’ve had decades of economists, experts, and policymakers fine-tuning things. Surely, stagflation was a problem we figured out how to fix for good… right?
Well, maybe not.
So, What Is Stagflation?
In simple terms, it’s when the economy gets stuck in a bad spot: prices keep going up, but growth slows down, and jobs get harder to find. It’s like being stuck in traffic while gas prices skyrocket and your paycheck doesn’t stretch as far. Not a fun combo.
Normally, we think of inflation as a side effect of a growing, booming economy. But stagflation flips that on its head. You get high prices and a sluggish economy at the same time.
How Does That Even Happen?
Think of it this way: sometimes prices rise because people are spending like crazy (think of housing booms or busy holiday shopping seasons). But other times, prices go up because it simply costs more to make or move things—like when supply chains get jammed up, or global events make oil, food, or other essentials more expensive.
If the economy slows down at the same time—fewer jobs, less business activity—but those price pressures stick around, you end up with stagflation.
What Should We Be Watching?
For those of us in real estate, lending, title, and all the connected industries, it helps to keep an eye on a few basics:
- Are prices (inflation) still climbing?
- Is the overall economy growing or shrinking?
- Are more people struggling to find work?
If all three point in the wrong direction, that’s the stagflation trifecta.
Why This Matters (Still)
I’m not bringing up stagflation to scare anyone or pretend I have all the answers. But it is one of those economic terms that pops up when times get complicated, and lately, things have certainly been complicated.
Essentially, stagflation occurs when inflation is driven by supply problems rather than demand overheating—and policy responses can’t easily fix supply constraints in the same way they can impact demand-based issues.
For those of us who’ve seen this before, it’s a reminder that even when we think we’ve moved past certain problems, the world has a way of surprising us. For others, it might be the first time hearing the term outside of a textbook.
Either way, it’s worth understanding—not in a “gloom and doom” way, but in a “let’s keep an eye on this” way. Especially in industries like ours, where economic shifts ripple out quickly to affect things like housing, lending, and business activity.
Stagflation is not a certainty on our road ahead, but brushing up on what it is makes it easier to understand the conversations (and headlines) happening around us.
Until Next Time,
Mary Schuster
Chief Knowledge Officer
October Research, LLC