To combat the persistent double-digit inflation of the late 1970s, Chairman Paul Volcker raised the federal funds rate to historic highs, reaching nearly 20% in 1981. The stock market crash of October 1987, known as Black Monday, created significant panic and erased substantial market value.
Federal Reserve Policy and the 1980s Recession Response: Navigating High Interest Rates and Economic Contraction
Interest rates began to decline after 1985, encouraging a new wave of borrowing and investment. Industrial production dropped sharply, and the GDP contracted significantly during the early part of the decade.
Many analysts point to 1987 as a critical year, although the definition of a "recession" that year is subject to debate. 8% in late 1982, the highest level since World War II.
How the Federal Reserve Fought 1980s Inflation and Addressed the Recession
Global competition started to put pressure on American manufacturing industries. 1% Onset of recession 1981 -1.
More About Was there a recession in the 80s
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