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Increase In Core Inflation Won t Be Transitory Bad Timing For decades the Federal Reserve anticipated inflation whenever the Unemployment Rate fell to a low level. In 9 of the last 10 recessions since 1954 the Fed hiked the federal funds rate over a period of time until they went too far. The Unemployment Rate subsequently jumped as the economy entered a recession causing the Fed to slash the federal funds rate. This pattern is consistent especially with benefit of hindsight. The one exception was in 1990 when Saddam Hussein invaded Kuwait causing oil prices to spike and a brief war. Please share this article - Go to very top of page, right hand side, for social media buttons. ....
Long Term Downtrend in GDP By definition a recession occurs when GDP declines in two consecutive quarters, which is one of the reasons why all recessions are not created equal. In 1970 and 1974 GDP contracted by a modest -0.32% and -0.54%, minor hick-ups compared to the 1982 decline of -1.80%. The 1990 recession was shallow as GDP only fell by -0.11%. In 2001 GDP actually rose by +1.00% but during the year there were two consecutive quarters in which GDP was lower so it was technically ruled a recession. In 2009 GDP shrank by -2.54%, which was the largest annual decline since the post World War II plunge of -11.6% in 1946. ....
Traditional Sources of Pent-Up Demand GDP estimates for 2021 keep climbing with the majority of economists expect a Roaring Twenties type of Boom kicking into gear in the second half of this year. Economists expect the successful vaccination of the majority of Americans to be completed by mid year which will unleash a torrent of pent-up demand. This concept is easy to grasp after a year of being careful, postponing vacations, not being able to enjoy frequent visits with family and friends around the dinner table, or catching a good movie and eating buttered popcorn, and spontaneously dining in at a favorite restaurant. ....