Economic Stagnation - Stagflation in The U.S.

Stagflation in The U.S.

The period following the 1973 oil crisis was characterized by stagflation, the combination of low economic and productivity growth and high inflation. The period was also characterized by high interest rates, which is not entirely consistent with secular stagnation. Stronger economic growth resumed and inflation declined during the 1980s.

Although productivity never returned to peak levels, it did enjoy a revival with the growth of the computer and communications industries in the 1980s and 1990s. This enabled a recovery in GDP growth rates; however, debt in the period following 1982 grew at a much faster rate than GDP.

The U. S. economy experienced structural changes following the stagflation. Steel consumption peaked in 1973, both on an absolute and per-capita basis, and never returned to previous levels. The energy intensity of the U.S. and many other developed economies also began to decline after 1973. Health care expenditures rose to over 17% of the economy.