Early 1980s recession in the United States

The United States entered recession in January 1980 and returned to growth six months later in July 1980.^[1] Although recovery took hold, the unemployment rate remained unchanged through the start of a second recession in July 1981.^[2] The downturn ended 16 months later, in November 1982.^[1] The economy entered a strong recovery and experienced a lengthy expansion through 1990.^[3]

Principal causes of the 1980 recession included contractionary monetary policy undertaken by the Federal Reserve to combat double digit inflation and residual effects of the energy crisis.^[4] Manufacturing and construction failed to recover before more aggressive inflation reducing policy was adopted by the Federal Reserve in 1981, causing a second downturn.^[2][4] Due to their proximity and compounded effects, they are commonly referred to as the early 1980s recession, an example of a W-shaped or "double dip" recession; it remains the most recent example of such a recession in the United States.^[5]

The recession marked a shift in policy from more traditional Keynesian economics to the adoption of neoliberal economic policies. This change was primarily achieved through tax reform and stronger monetary policy on the part of the Federal Reserve, with the strong recovery and long, stable period of growth that followed increasing the popularity of both concepts in political and academic circles.