A Goldilocks economy is an economy that is not too hot or cold, in other words sustains moderate economic growth, and that has low inflation, which allows a market-friendly monetary policy. The name comes from the children's story The Three Bears. The first use of this phrase is credited to David Shulman of Salomon Brothers who wrote "The Goldilocks Economy: Keeping the Bears at Bay" in March 1992.[1]
Goldilocks economy is primarily used to describe the economic indicators of the Great moderation: stable GDP growth, industrial production, monthly payroll employment, unemployment rate, real wages and consumer prices.[2]
Micheal Hudson argues that the positive connotations associated with the "Goldilocks economy" and the "Great moderation" are because these terms were coined by bankers, who saw their loans soar along with their bonuses during this period. However, this economy was not "Goldilocks" for everyone. Indeed, during this period, the rich accumulated more wealth while the poor and middle class accumulated a tremendous amount of household debt.[3]
Around the year 2017 is seen by some as being the new peak of a goldilocks economy.[4]
References
- ^ Greenberg, Herb (11 January 2008). "The Truth about 'Goldilocks'". MarketWatch. Retrieved 22 October 2018.
- ^ Bernanke, Ben (February 20, 2004). "The Great Moderation". federalreserve.gov. Retrieved 15 April 2011.
- ^ Hudson, Micheal (2015). "11. The Bubble Economy: From Asset-Price Inflation to Debt Deflation". Killing the host : how financial parasites and debt destroy the global economy. CounterPunch Books. ISBN 978-3-9814842-8-1. OCLC 920675065.
- ^ "Economic optimism drives stockmarket highs". The Economist. 17 October 2017.
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