By Manfred W. Keil and Robert A. Kleinhenz | Inland Empire Economic Partnership
Once upon a time the health of the economy could largely be gauged by looking at three indicators of economic well-being: the inflation rate, the unemployment rate, and the growth rate of the gross domestic product. While these continue to yield important vital signs, there are mixed signals for these measures during the recovery period. At times like these, you have to look beyond “headline” numbers to get a better sense of where the overall economy is moving.
If you want to scare economists and politicians before Halloween, all you have to do is to use the word “stagflation.” Stagflation is a combination of stagnation and inflation, a phenomenon last observed in the 1970s.
Inflation typically is associated with high demand and a booming economy, but in this case refers to inflation while the economy is stagnating. It was caused then by a supply…