Stagflation is about to push unemployment higher: here's what to expect
3/26/202630 min
What happens when the economy stops playing by the rules?
We’re taught that inflation and unemployment move like a seesaw, one goes up, the other goes down. But sometimes the seesaw snaps. Prices climb and people lose jobs at the same time.
It happened dramatically in the 1970s, and with oil prices surging again and global tensions rising people are whispering the word Stagnation once more.
Guests:
Professor Bob Gregory, one of Australia’s most influential economists, who watched the original outbreak of stagflation unfold and later sat on the Reserve Bank board during another era of economic upheaval.
Gareth Hutchens, ABC business and economics reporter who has spent years examining how these big economic shocks ripple through everyday life.
Clips
Transcript preview
First 90 secondsGareth Hutchens· Guest0:00
ABC Listen. Podcasts, radio, news, music, and more.
Sisonke Msimang0:05
[suspenseful music] It's hard to get your loved ones to change their habits, let alone change world history, but that's exactly what happened with apartheid.
Peter Martin· Host0:15
[crowd cheering] A demonstrator has run right through the play.
Sisonke Msimang0:17
Australians and millions of others took a stand and helped to bring the racist South African regime to its knees. I'm Sisonke Msimang. And join me for Boycott, the fight to end apartheid. ABC Rewind: Boycott. Search for ABC Rewind on ABC Listen or wherever you get your podcasts.
Peter Martin· Host0:35
Almost everything you hear about economics on radio and television and on podcasts, certainly on this one, treats inflation and unemployment as opposites. You can have a lot of inflation or a lot of unemployment, but you can't have a lot of both. If inflation is too high, you can whack it down by pushing up interest rates, but you'll push unemployment up. If unemployment is too high, you can whack it down, but you'll push inflation up. It's like a seesaw. But what if it stops working and unemployment and inflation climb together? It can happen. It did happen during the great oil crisis in the mid-1970s.
Gough Whitlam· Soundbite1:19
And we're beginning to hear this term stagflation. Stagflation. Stagflation. Stagflation.
Speaker 41:25
Stagflation, which is where prices continue to increase,