U.S. Economy

As everyone is well aware, our economy is currently in a recession. In and of itself, that is not unusual, it is a normal part of every business cycle.  This is the sixth recession that we have experienced since 1971 and all of them could be called "oil recessions."  The first recession, in 1973, was a direct result of the Arab oil embargo and it lasted for 16 months.  The next, in 1979/1980, was the shortest, lasting only six months.  However, it was followed in less than a year by a severe 16 month recession due to continued high oil prices and systemic problems in the economy; high inflation, high unemployment, and high interest rates, or "stagflation" as it was called then.

President Reagan's economic policies of large individual and business tax cuts coupled with deregulation of major industries, described as "voodoo economics" at the time, finally broke the back of stagflation, allowed free markets to thrive, and set the stage for the over two decades of prosperity we have experienced since then.  That prosperity had been only briefly interrupted by relatively mild economic downturns in 1990/1991 and 2001 that each lasted eight months and were also caused or worsened by rapid oil price increases.  They were short and fairly mild recessions because there were no longer major underlying systemic problems in the economy.

Although the basic underlying cause of the current recession is the same as the previous five, rapidly rising oil prices, this one is different than the last two.  The length of this downturn has already exceeded both of the most recent recessions, the rest of the world's major economies are also in a global oil recession, and some free market structural and regulatory problems in the housing and financial sectors were allowed to develop that still have not been adequately addressed, which is exacerbating the situation.  A recovery from this recession has been made more difficult by some of the actions our government has already taken and has plans to take.  If some or all of the measures being proposed in Washington are implemented, it could take years before the economy is actually healthy again.

Economic News/Opinion