Twenty-five Years of Economic Upheaval

Economic Overview - The US experienced a period of prosperity and social progress with low unemployment and a booming economy [1] - A serious financial crisis emerged, with overvalued houses and potential mortgage problems [2] - The economic recovery proceeded at a moderate pace, slower than expected, with a manufacturing recession due to the collapse in oil prices [3] - The COVID-19 pandemic caused a rapid shutdown of the economy and the largest unemployment rate since the Great Depression [5] - Inflation started to take hold, leading to nervousness and unhappiness about economic situations [5] Monetary Policy and Fiscal Spending - Interest rates are surprisingly low despite high budget deficits and debt [7] - The US spent too little during the financial crisis and too much during COVID-19 [9] - Running $2 trillion deficits in a growing economy is not advisable [9] - The benefits of economic stimulus tended to favor those with capital [10] - The Federal Reserve focused on getting inflation up by 01%-02% before realizing inflation was not dead [13] Inflation and Globalization - Globalization, particularly China's entry into the WTO, and increased immigration kept inflation down for two decades after 2000 [15][16] - COVID-19 and restrictions on immigration have put upward pressure on goods prices and wage inflation [17] - De-globalization and immigration restrictions could drive wages up, while AI's impact remains uncertain [17][18] European Economy - The Eurozone crisis, triggered by imbalances, led to painful adjustments in countries like Portugal, Greece, Spain, and Ireland, but also some convergence [24] - The EU is slowly moving towards fiscal coordination, but politics lags behind economics [25][26] - Brexit has negatively impacted the UK economy, potentially reducing GDP by 5%-7% [27][28] - Europe's growth rate is projected to be no more than 1%, possibly around 05% per year [30]