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November 29, 1998
"Have You Forgotten 1974-75? That was Bad"
San Jose Mercury News
By Timothy Taylor
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FOR THOSE who can't seem to remember a scarier economic situation than the summer of 1998, may I suggest the global recession of 1974-75? The U.S. economy shrank in size in both 1974 and 1975. Unemployment shot from 5.6 percent in 1974 to 8.5 percent. Inflation went from 3 percent in 1972 to 12 percent in 1974. The Dow Jones average fell almost 20 percent from 1973 to 1974, and then didn't rebound permanently above its 1973 level until the early 1980s.

The world economy was reeling as well. The oil-exporting nations of the Middle East jacked up oil prices, which set rich and poor economies tottering. The Bretton Woods treaty, which had fixed exchange rates since World War II, had just fallen apart, and no one knew how well floating exchange rates would work.

Compared to all that, the bumps of 1998 seem mild indeed.

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