US Economy Faced Challenges in 1990 and 1998, Says Steven Sinofsky

Washington D.C. – The U.S. economy experienced significant downturns in both 1990 and 1998, according to a recent social media post by Steven Sinofsky. The tweet highlighted these periods as times when "the whole Economy broke," drawing a connection between the 1990 event and prior antitrust litigation that led to the breakup of the phone company.

The recession of 1990-1991, lasting eight months from July 1990 to March 1991, was characterized by a "jobless recovery" where unemployment continued to rise even after economic growth resumed. Key factors contributing to this downturn included restrictive monetary policy by the Federal Reserve aimed at curbing inflation, the 1990 oil price shock stemming from Iraq's invasion of Kuwait, and the lingering effects of the savings and loan crisis. The economy shed approximately 1.6 million jobs during this period.

The breakup of AT&T, often referred to as the Bell System divestiture, occurred in 1984, several years before the 1990 recession. This landmark antitrust case restructured the telecommunications industry, creating several regional Bell operating companies. While it reshaped the market, direct links to the 1990 recession's onset are not widely cited by economists.

In 1998, the global economy faced significant instability, primarily due to the Asian financial crisis and the Russian financial crisis. These international events led to a period of market volatility and concerns about contagion in the U.S. and other developed economies. The collapse of the hedge fund Long-Term Capital Management (LTCM) also occurred in 1998, requiring a bailout orchestrated by the Federal Reserve to prevent a wider financial crisis.

Despite these challenges, the 1990s are largely remembered for a period of sustained economic expansion that followed the 1990-1991 recession. This boom, fueled by technological advancements and low interest rates, continued until the early 2000s, making the 1990s one of the longest periods of economic growth in U.S. history.