“滞胀”一词 – 持续通货膨胀和停滞不前的商业活动（即经济衰退）的经济状况，加上失业率的上升 – 描述了1970年代新的经济萎靡不振。通货膨胀似乎依赖于自身。人们开始预计商品价格会继续上涨，因此他们购买了更多商品。这种需求的增加推高了价格，导致对更高工资的需求，这推动价格继续上涨仍在持续上升。劳动合同越来越多地包括自动生活费条款，政府开始将一些支付，例如社会保障支付，与消费者价格指数挂钩，这是最着名的通货膨胀指标。虽然这些做法帮助工人和退休人员应对通货膨胀，但他们使通货膨胀持续下去。政府不断增加的资金需求增加了预算赤字，导致政府借贷增加，从而进一步推高了利率，增加了企业和消费者的成本。随着能源成本和利率的高涨，商业投资萎缩，失业率升至令人不安的水平。无奈之下，总统吉米卡特（1977-1981）试图通过增加政府支出来对抗经济疲软和失业，并制定了自愿的工资和价格指导方针来控制通货膨胀。两者都很不成功。对通货膨胀可能更成功但不那么引人注目的攻击涉及许多行业的“放松管制”，包括航空公司，卡车运输和铁路。这些行业受到严格监管，政府控制路线和票价。放松管制的支持继续超越卡特政府。在20世纪80年代，政府放松了对银行利率和长途电话服务的控制，并在20世纪90年代放松了对本地电话服务的监管。反对通货膨胀的最重要因素是联邦储备委员会，该委员会从1979年开始严厉打击货币供应。由于拒绝提供通胀肆虐的经济所需的全部资金，美联储引发利率上升。结果，消费者支出和商业借贷突然放缓。经济很快陷入深度衰退，而不是从已经存在的滞胀的各个方面恢复过来。
The term “stagflation” — an economic condition of both continuing inflation and stagnant business activity (i.e. recession), together with an increasing unemployment rate — described the new economic malaise in the 1970’s pretty accurately. Inflation seemed to feed on itself. People began to expect continued increases in the price of goods, so they bought more. This increased demand pushed up prices, leading to demands for higher wages, which pushed prices higher still in a continuing upward spiral. Labor contracts increasingly came to include automatic cost-of-living clauses, and the government began to peg some payments, such as those for Social Security, to the Consumer Price Index, the best-known gauge of inflation. While these practices helped workers and retirees cope with inflation, they perpetuated inflation. The government’s ever-rising need for funds swelled the budget deficit and led to greater government borrowing, which in turn pushed up interest rates and increased costs for businesses and consumers even further. With energy costs and interest rates high, business investment languished and unemployment rose to uncomfortable levels. In desperation, President Jimmy Carter (1977-1981) tried to combat economic weakness and unemployment by increasing government spending, and he established voluntary wage and price guidelines to control inflation. Both were largely unsuccessful. A perhaps more successful but less dramatic attack on inflation involved the “deregulation” of numerous industries, including airlines, trucking, and railroads. These industries had been tightly regulated, with the government controlling routes and fares. Support for deregulation continued beyond the Carter administration. In the 1980s, the government relaxed controls on bank interest rates and long-distance telephone service, and in the 1990s it moved to ease regulation of local telephone service. The most important element in the war against inflation was the Federal Reserve Board, which clamped down hard on the money supply beginning in 1979. By refusing to supply all the money an inflation-ravaged economy wanted, the Fed caused interest rates to rise. As a result, consumer spending and business borrowing slowed abruptly. The economy soon fell into a deep recession rather than recovering from all aspects of the stagflation that had been present.