Stephen Mihm, a professor of history at the University of Georgia, is co-author of ‘Crisis Economics: A Crash Course in the Future of Finance’. But it does mean that anyone who speaks with certainty about where the economy is headed at such a moment should tread very gingerly. That doesn’t mean we’re headed for a recession - or even in one now. Put unforeseen inflation, sour sentiment and unexpectedly strong job growth into the mix, and things get messy.Īll of those conditions are present now. Any recession or recovery is often attended by confusing, even contradictory data. But reliving the confusion of that earlier era is instructive. The economy of 2022 is quite different from the one in place in the twilight of the Nixon administration. He was hardly alone: Other economists and forecasters put the end of the recession in the fall of 1975, with some arguing that the downturn might well continue into 1976, even though subsequent study would reveal that the economy was already recovering. “Greenspan Sees Recession Continuing,” the New York Times declared. A month after the recession would eventually be understood to have ended, Greenspan, who had become President Gerald Ford’s economic adviser, remained pessimistic. But the end, like the beginning, was not fully understood at the time. The recession would only end in March 1975. It would remain in recession for another six months, during which the more familiar symptoms of a contraction, most notably job losses, made their appearance. It had long ago slipped, as most people concluded by fall. When new data released in July suggested that the unemployment rate would remain unchanged, the Washington Post reported that this gave hope the economy was “expanding again instead of slipping into recession.” Data that had previously been cause for hope - low inventories, for example - were revealed as statistical mirages.īut even as late as July, the fact that the employment rate remained stubbornly low gave ammunition to the optimists. The paradox of job growth amid declining output and pervasive inflation resolved itself by the late summer of 1974, when government economists released revisions to earlier data that allowed a far sharper picture of what was happening. Member Solomon Fabricant channelled Erwin Schrodinger and his half-dead, half-alive cat, declaring that if the recession was “real” it must have begun the previous November - but he simultaneously maintained it was “not yet a real recession.” But this was still too extreme a view for many, with a number of economists preferring the language of a “slowdown” or a new oxymoron: a “growth recession.”Īs economists and policy makers struggled to make sense of contradictory data, the oracles at the National Bureau of Economic Research muddied the water further. By July - the eighth month of the recession - Citibank’s economists speculated that the country might well be in the midst of a “pervasive recession”. The following month, US Federal Reserve Chairman Arthur Burns added: “I don’t like recessions and don’t believe it will happen.”īut by this point, some analysts couldn’t help but wonder if ordinary Americans might be on to something. In April, prominent economist Paul McCracken delivered an address at a conference on forecasting that described a recession as “unlikely”. Herbert Stein, who chaired the President’s Council of Economic Advisers, celebrated the “underlying strength” of the economy in March. Very Important People were having none of it. The survey economists noted “very many” of the respondents “believed that a recession was already here.” Which was entirely accurate, given that one had been in place for four months. The University of Michigan consumer survey from March registered the most pessimistic readings in a quarter century. In March 1974, Alan Greenspan, then heading an economic consulting firm, gave a speech in which he declared that “the end of the recession, if there ever was one, is close at hand.” After a brief hiccup in job creation over the winter, the economy continued to add new positions, particularly in areas unaffected by rising oil prices. Subsequent revisions ultimately nudged this number into positive territory.Īdditional data offered yet more hope. Those job losses from the previous month? Only 105,000 workers were put out of work, not 260,000. Not long afterward, nonfarm payrolls for February rose 175,000. Unlocking opportunities in Metal and Mining.Interview Series Business In The Week Ahead.
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