[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

broken only by two brief recessions lasting only 8 months each: one in 1990–91 and
the other in 2001.
Cyclical unemployment reflects unused labor resources. Periods of high unemployment
also lead to idle factories and underutilized plant and equipment. There
is a cost to the economy if its labor and capital resources are not fully employed.
The output that could have been produced with these resources is the opportunity
cost of cyclical unemployment.
Because of the potentially high costs, and the individual hardships, caused by
high levels of cyclical unemployment, most governments attempt to manage macroeconomic
policies to reduce its occurrence. In the United States, the Full Employment
Act of 1946 and the Full Employment and Balanced Growth Act of 1978 (often called
the Humphrey-Hawkins Act) reflect the commitment of the federal government to
bear the responsibility for maintaining full employment. As noted in Chapter 21, the
Humphrey-Hawkins Act mandates that the federal government “promote full employment
and production, increased real income, balanced growth, a balanced Federal
budget, adequate productivity growth, proper attention to national priorities, achievement
of an improved trade balance, . . . and reasonable price stability.” How governments
try to achieve these goals and how successful their efforts have been are
among the topics we will discuss in the next few chapters.
11
1980–1982
back-to-back
recessions
1990–1991
recession
2001
recession
10
BILLIONS OF 2000 DOLLARS
9
8
7
6
Peaks
5
Troughs
4
1980 1983 1986 1989 1992 1995 1998 2001 2003
Figure 29.3
PEAKS AND TROUGHS
SINCE 1980
There have been four economic recessions since 1980. After reaching a peak in January
1980, the economy entered a recession that lasted until July 1980, when the trough
was reached. The next peak was in July 1981, making this the shortest expansion in U.S.
history. The trough of the 1981–1982 recession came in November 1982. The economy
then entered a long expansion, whose peak occurred in July 1990. The longest expansion
on record lasted from the trough in July 1990 to the peak in March 2001. The
recession of 2001 ended in November 2001.
SOURCE: NBER Business Cycle Reference Dates (www.nber.org/cycles.html).
ECONOMIC FLUCTUATIONS ∂ 641