I've recently heard several people refer to the 1990s' economy as a "bubble." The latest being Lester Holt on CNN this morning. I think this is a bad misuse language.

Financial markets can probably be described as a bubble, which then burst. However, the real economy showed no real "popping" of a bubble. Real GDP might have slightly declined with the mild 2001-02 recession; but, there was no major decline as you'd expect to see with a bubble.

I think better language would be that the high growth rates of the late 1990s were at most "unsustainable." (Although the sustainability of the 1990s boom is debatable as well.)

Below are graphs of real GDP as well as the NASDAQ composite index from 1990 to the present. The NASDAQ shows what a bubble looks like. The GDP graph clearly shows the recessions of the early 1990s and the 2001-02 recession - but it looks nothing like a bubble.

source: NIPA Data

source: quote.com

I've recently heard several people refer to the 1990s' economy as a "bubble." The latest being Lester Holt on CNN... | Posted December 6, 2002 11:56 AM by John Irons