Robert Siegel talks with Robert Samuelson, a contributing editor to Newsweek magazine, about the term "stagflation," which is being tossed around a lot by economic commentators these days. Samuelson says it's being misused.
The term stagflation has historically meant not only a mixture of high inflation and high unemployment, but "the persistence of this poisonous combination over long periods of time."
"When you just have it for a few months or even a year and then it disappears, you don't really have stagnation," Samuelson says. "You just have a mix of high unemployment and high inflation."
Samuelson also argues that sometimes a recession is necessary to prevent the larger and longer lasting harm to the U.S. economy.
"Although recessions are unhappy events," Samuelson says, "and they hurt people — they put people out of jobs, they reduce profits, they reduce incomes — they are sometimes necessary to prevent worse eventualities and a worse recession."
He argues that in the 1970s, efforts to avoid and minimize economic downturns made inflation and the recession in the U.S. even worse.
Robert Samuelson's column, "The Specter of Stagflation," appears in this week's Newsweek and in The Washington Post.