A Goldilocks economy is an economy served up just how Goldilocks likes her porridge, not too hot, not too cold, but just right. The idea is to keep the economy from getting too hot and causing inflation as well as preventing it from getting too cold and going into recession. This describes the U.S. economy during the 1990s, as well as the model economy that folks who work at the Federal Reserve are trying to create and maintain. The Clinton-Greenspan-Robert Rubin economy was considered a Goldilocks economy.
Goldilocks economies are hard to create and harder to maintain. It is arguable how much influence the Fed can even bring to bear on the U.S. economy now that so much business is global rather than domestic. Moreover, just as the three bears came home to interrupt Goldilocks’ meal, a bear market can show up at any time to spoil the party.
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