Over the next few years, the jobless rate slowly receded, falling to 8.3% by the end of 1983 and to 7.2% by the time of the 1984 “Morning in America” Presidential election.
This tightening of monetary policy was compounded by the geo-political crisis caused by the Iranian Revolution and Iran-Iraq war, and subsequent reduction in oil supply, led to inflation peaking at 20.5% With inflation at 11.1% in 1980, The Federal Reserve raised interest rates to slow money supply, which in turn caused a rise in unemployment and the economy to slow. The short recession and recovery in January to June 1980, was followed by a sustained recession from July 1981 to November 1982. The National Bureau for Economic Research cites the “double-dip” as the harshest of the late 20th Century. There were two recessions in the USA in the early 80s, colloquially known as “The Double Dip” Recession.
