1937 all over again?
Last month, Scott Bailey, Southwest Washington regional labor economist for the state Employment Security Department, noted that the U.S. economy appeared to be in a bit of a lull. This month, he said that lull has expanded into a soft spot, with any number of key indicators coming up sputtering of late.
In his monthly labor market report Bailey writes, “As economic professor Mark Thoma notes, with policymakers focusing on the deficit and inflation, the chances of sending the economy into another recession via a policy error are growing – similar to what happened in 1937. At that time, the U.S. was in a strong recovery from the Great Depression. Congress worried about debt, cut the budget deficit. The Federal Reserve Bank, worried about inflation, raised interest rates. The economy then went into a severe recession.”
While our economy is showing some positive signs in Southwest Washington, this is a good reminder that history has shown us just how fragile post-recession recovery can be.
Certainly, it’s something to think about.
