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INFORMATIONAL MEMO <br />Page 3 <br />Rapidly Rising <br />Energy / <br />Gasoline Costs <br />1980: Energy/gasoline volatility and shortages in 1973 & 1979 which <br />generated inflationary pressure on other areas. <br />2022: Gasoline prices increased rapidly and generated some <br />pressure causing other price increases including shipping costs with <br />increased online ordering and global economy. There have not been <br />energy shortages reported. <br />Consumer <br />Price Index <br />(CPI) <br />1980: Consumer Price Index at all time high (especially for energy, <br />gasoline, food, shelter, services, and medical care). <br />2022: Consumer Price Index Increased demand for goods emerged <br />in 2021 as pandemic lockdowns ended, shops opened, and people <br />were able to buy things with money saved during economic <br />inactivity. <br />Inflation Fears <br />1980: Inflation surges and a high fear of worsening inflation during <br />the 1970's and early 1980's by policymakers, businesses, and <br />consumers actually generated more inflation and caused a crisis in <br />confidence. <br />2022: Business and producers of goods report low overall push back <br />by consumers for price increases due to shortages, shipping costs, <br />and industries fearing future volatility. <br />Economic <br />Structures <br />1980: Inflation persisted through the 1970's despite a sluggish <br />economy. Price controls emerged. Policymakers believed that <br />unemployment could be permanently reduced by accepting higher <br />inflation. Unemployment peaked at 9% in 1975. <br />2022: There are no price controls, and some Federal Reserve <br />Districts doubt there is much the federal government can do to <br />reduce gasoline prices or improve supply chain problems in the short <br />term. <br />Prices / Wages <br />Interconnected <br />1980: Businesses and producers of goods, fearing an increase in <br />costs, increased prices. In response, Unions asked for increased <br />wages for workers to keep up with increases in CPI. Unemployment <br />was high. <br />2022: Economic output is above pre -pandemic levels, but <br />employment is below pre -pandemic levels which means that fewer <br />employees working harder and are producing more. <br />Role of Federal <br />Reserve <br />1980: The Federal Reserve changed policies that initially made <br />inflation worse, however, the new Federal Reserve Chairman <br />predicted this pattern. Inflation fell sharply from a high of 14.5% <br />down to 5% in 1982. <br />2020: The Federal Reserve continues to make interest rate changes <br />to regulate the economy. <br />