Word: downturn
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Never has the economy gyrated so crazily as it did in 1980-and is doing now. For example, the U.S. used to enjoy years of rising production, incomes and employment between recessions. But as 1981 begins, economists generally believe that the nation is slipping into another downturn only about five months after getting out of the last one. And the 1980 slump was exceptionally severe: it knocked down the output of goods and services at an annual rate of 9.9% in the second quarter, added 1.7 million people to the jobless rolls in April and May, and contributed...
...agree with a number of economists who are predicting that we are in for yet another downturn...
...discussion of the U.S. economy is deep concern about the nation's increasingly mercurial interest rates. The prime lending rate that big commercial banks charge their best corporate customers jumped last week to 21.5%, breaking the 20% peak of last April and heightening fears of a renewed economic downturn. The economists on TIME'S board predicted that the rate is likely to go as high as 23% early next year...
Such a shallow recession will have differing impacts on various areas of the economy. The downturn is not expected, for example, to affect employment seriously. The jobless rate is projected to climb from its present level of 7.5% to a peak of 8.2% in 1981's second quarter, before slipping back to 8% at year's end. The public, however, can expect little relief on prices next year. From a 1980 inflation rate of 13%, the board of economists projected that the increase in consumer prices will only slow to 11.4% at best...
...response, Monetarist Sprinkel argued that the Federal Reserve has not really been sticking to its tight money policy at all. In Sprinkel's view, Volcker "aborted the recession last spring" by injecting money rapidly back into the economy to ease the downturn during an election year. Said Sprinkel: "I have been watching the Fed since Harry Truman's days, and though Presidents have no direct control over the Fed, the White House does have all sorts of subtle influences to help it get the sort of monetary policy it wants...