What is normal?

 

This week the Washington Post ran an article declaring High interest rates, rising inflation: The economy still isn’t normal. 

But what is normal?

This is 30 year mortgage rates since the 1970s

Here is the inflation rate since the 1950s

Here is the unemployment rate since the 1950s

At 3.8 percent the unemployment rate is at levels that we had not seen since the late 1960s. The rate of inflation of 3.5% is also low in comparison to much of recent economic history. 

When I first began to study economics in the 1980s the combination would have been regarded as miraculous. Even after people believed the Volcker had beaten the inflationary expectations out of people, no one was predicting a such a low combination of unemployment and inflation. 

Even interest rates, which have increased in recent years in response to Federal Reserve policies, look relatively low compared to the late 20th century.

I have to admit it does appear that current economic conditions are not normal. Perhaps we should be grateful.