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