What does secular stagnation really mean?
![](https://assets.weforum.org/article/image/large_JcLEGyGN7Ffgl-R1sicrKcYM8eioVvbIAxLkoyCpgoE.jpg)
![A hand holding a looking glass by a lake](/uplink.jpg)
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:
Financial and Monetary Systems
If you’re reading up on the economy, a term you’re likely to hear thrown around is secular stagnation.
In a 2013 speech at the IMF, Harvard’s Larry Summers brought the phrase — first used by Alvin Hansen in 1938 — back to talk about the current economic malaise that the global economy seemed mired in following the financial crisis.
Citi analysts summarized Summers’ use of the term and the resulting popularization as follows in a note to clients this week: “The modern version of Secular Stagnation is a catch-all term for the ills of the global economy, such as weak growth and falling inflation.”
Citi added:
The most profound implications stem from demand-led secular stagnation. In particular, that the zero bound is a problem in delivering actual stimulus while bubbles may help deliver demand (and so may be part of the toolkit and landscape for long horizons) but their ultimate collapse further entrenches the core yield declines.
And so in other words, secular stagnation puts forward the idea that interest rates at 0% might not be low enough to sufficiently stimulate an economy facing a demand shortage as stark as what some economists think we’ve been grappling with since the crisis.
In its note, Citi included the following graphic, showing a broad outline of what secular stagnation is made up of, why it persists, and the problems it poses.
And this schematic at once makes it clearer what we’re talking about when we talk about secular stagnation, and why we still might not all be talking about the same thing.
This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.
To keep up with the Agenda subscribe to our weekly newsletter.
Author: Myles Udland is a reporter for Business Insider’s Markets team.
Image: Workers walk outside the London Stock Exchange. REUTERS/Andrew Winning.
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.
The views expressed in this article are those of the author alone and not the World Economic Forum.
The Agenda Weekly
A weekly update of the most important issues driving the global agenda
You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.
More on Economic GrowthSee all
Simon Torkington
August 30, 2024
Andrea Willige
August 6, 2024
Omair Ansari and Manahil Javaid
August 6, 2024
Tarini Fernando and Nadia Shamsad
July 18, 2024