- June 12, 2021
- Posted by: Stratford Team
- Category: Business
For 40 years, the U.S. has been in a disinflationary environment. Inflation as measured by the Consumer Price Index peaked at 13.3% in 1979. It fell rapidly due to a deep recession and deregulation in the early 1980s. After falling to 3.8% in 1982, it bounced around the 4% level for the rest of the decade.
After a short-lived run-up due the effect of the invasion of Kuwait on oil prices in 1990, inflation fell into the 2% to 3% range for about 20 years before averaging about 2% in the 2010s.
Interest rates fell commensurately. The benchmark 30-year Treasury bond yielded 14% in 1981 vs. 2.6% in 2019.
These price and interest rate changes showed little correlation to any of the usual suspects. The federal budget surpluses of the late 1990s or the trillion deficits post-2008, no difference. Civilian unemployment rate of 10% or 3.5%, no difference. Economic boom, economic bust, no difference.
Fast forward to 2021. The Labor Department just reported that…