It seems like everyone is wondering when, or if, the U.S. economy is going to shake off the doldrums. Believe it or not, a headline from the Los Angeles Times, “What recession? It’s boom time again in Silicon Valley,” made it clear that a recovery is well under way in northern California.
The article describes the current real estate boom in the San Francisco Bay area. That’s right, real estate boom. Most of us look at national headlines and national data, but these don’t reflect trends in every locality. Granted, recessions usually are broad, affecting most industries. The oil embargo of 1973-1974 led to gasoline shortages and substantially higher fuel prices; it’s hard to find anyone who isn’t affected by the price of fuel. Likewise, the stagflation of the late 1970s ended when the Federal Reserve Board nearly doubled the federal funds rate in less than two years. The rate, which averaged 11.2 percent in 1979, jumped to 20 percent in 1981. This sort of thing affects the entire economy. (more...)