STAGFLATION: Europe Echoes a Dark Economic Past
"We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of 'stagflation' situation. And history, in modern terms, is indeed being made.”
Iain Macleod is absolutely right about Europe. He may have stated it in the House of Commons on November 17, 1965, but you'd be hard pressed to find a better description of what Europe faces today.
Stagflation is characterized by persistently high or climbing unemployment and inflation that continuously stifles exports and economic activity. Aggressive expansion of the monetary base is compounding the situation.
In today's global economic environment, the 11.3% total Eurozone unemployment rate and 2.6% inflation rate creates a headwind that is crippling any attempts to increase business within local, regional and national economies.
The unemployment rate is the highest measured since Eurostat started tracking data in 1995. The inflation rate accelerated from 2.4% to 2.6% between June and July alone.
Eurostat, the official European Commission for economic data, recently published this chart. With little good news coming from Europe these days, we can expect to see the upward trends in inflation and unemployment continue through the end of the year.
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