What Did the Great Moderation Moderate?

Let’s see. What country am I in today? Oh yeah: the United States. Well, California, anyway, which is sort of an outlying territory these days. So let’s do something America-centric with a chart to get me back into non-vacation mode.

Alex Tabarrok points out today that the “Great Moderation” in the US economy appears to be alive and well: the economy doesn’t bounce up and down nearly as much as it used to. Here’s the basic chart:

Let’s count. In the four decades from the 50s to the 80s, the economy grew by more than 3 percent for a sustained period five times. It declined below zero twice.

In three decades since then, it’s grown by more than 3 percent once and declined below zero once.

Is that more moderate? I suppose so. But it’s pretty heavily weighted to moderation at the high end. Troughs have tended to hover around 1 percent growth for the entire era since World War II, while peaks have declined from around 4 percent to around 2 percent. Basically, the Great Moderation has been a moderation in the frequency of economic booms.

Do we know why this happened? Apparently not. But if I had to guess, I’d say it’s at least partly the result of a Fed that became so nervous of inflation after the 80s that it tamped down the economy anytime there was even a hint of upward price movement. Basically, they’ve been routinely taking the punch bowl away too soon, instead of allowing the economy to roar occasionally even at the risk of inflation getting a little high.

This is still happening today. Inflation hasn’t even hit the Fed’s 2-percent target over the past five years, let alone shown signs of going above it. And yet, the Fed is still fearfully pulling back, afraid to let the economy grow lest somehow, somewhere, inflation might rise to 3 percent or some other ghastly number.

This is the world we live in today. Recessions are still OK, but big economic booms aren’t. I’m not sure “moderation” is the right word for that.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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