Drawing parallels between the economic landscape of 1980 and 2024…

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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.
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