The economy has been extremely stable since the recession ended ten years ago. By historical standards, the volatility of quarter-to-quarter changes in GDP is unusually low. This seems to be a repeat of the Great Moderation.
Here’s a description from my past article on the Great Moderation: “Think back to December 1982 and visualize a business leader with 25 years of experience. That executive had managed through five recessions. Now fast forward to December 2007 and visualize the next generation business leader. In that person's 25 years of experience, he or she had managed through only two recessions. Five recessions or two recessions over the course of 25 years: it makes a difference to how one perceives the world.”
The economy has ups and downs, frequently called business cycles, although the word “cycle” often connotes a regularity that the economy lacks. The volatility has calmed in the last 70 years compared to the era before World War II. It has calmed in two different ways. The frequency of recessions has dropped, and the incidence of unusually strong growth periods has dropped.
Not only were the last 70 years calm, the years from 1983 through 2007 were especially calm. So calm, in fact, that economists dubbed the era “The Great Moderation.”
Then the 2008-09 recession clobbered the economy, and economists declared the Great Moderation over. Since then, however, calm has returned. One economist said “the Great Moderation never really left. It just…treated itself to a two-year vacation.”
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Answer: The economy has basically been extremely stable since the recession ended ten years ago
Explanation:
