New Delhi, Aug. 3 -- As the world's biggest economy faces increasing risks of stagflation-a scenario characterised by simultaneous high inflation and high unemployment, investors and policymakers worldwide are closely monitoring potential repercussions.

This article explores how a possible stagflation in the United States could influence US markets and, subsequently, Indian markets.

Understanding stagflation and risks

Stagflation is a condition where inflation rises even as economic growth remains sluggish or stagnant, often accompanied by rising unemployment. Unlike demand-driven inflation, which typically results from increased consumer spending, stagflation usually stems from supply-side shocks or external disruptions.

One of the m...