Goldilocks Economy

The term Goldilocks economy refers to an economy that’s not too hot, not too cold. In other words, a Goldilocks Economy is “just right.” The term Goldilocks economy was first used in late 1989 to describe the U.S. economy as it entered the 1990s. In the perfect Goldilocks economy the economy is growing slowly enough not to cause inflation, yet it is strong enough to stave off a recession. The classic example of a Goldilocks economy is a growth rate of 2 to 2.5 percent with a balance of domestic consumption and overseas exports. The balancing act required of a Goldilocks economy is very delicate and during a Goldilocks economy the government takes few if any measures to “improve” the economy. A Goldilocks economy collapses if inflation takes off or if a recession takes hold.