Drawing parallels between the economic landscape of 1980 and 2024…

Reflecting on 1980’s economic conditions reveals striking similarities with today’s environment, from soaring interest rates to a divided economy.

Key points:

• Fed Chair Paul Volcker raised the Fed Funds Rate to 14% by January 1980, with mortgage rates peaking near 20%.
• Despite high rates, home prices remained high due to stubborn sellers, demographic trends, and supply-demand imbalances.
• Income inequality was evident, with the upper 1/3 of America booming while the bottom 2/3 struggled.
• Similarities exist with today’s “bifurcated economy,” where expensive properties sell well amidst struggles for the majority.
• Nominal US home prices continued to rise in the early 1980s despite economic challenges.
• Recession hit the US in 1980 and again in 1981-1982, contributing to economic uncertainty.

Source:

EVERYTHING OLD IS NEW AGAIN

Let’s take a Time Machine back to 1980, shall we? 🗞️

By January 1, 1980, Heroic Fed Chair Paul Volcker had hiked the Fed Funds Rate to a whopping 14%

30 year Mortgage rates would peak near 20%

But home prices wouldn’t come down

Huh?

1/4 pic.twitter.com/FdE1oXND9w

— Amy Nixon (@texasrunnerDFW) April 29, 2024