Could America’s economy escape recession?

As covid-19 spread throughout the world three years ago, many pored over the history of a previous pandemic, the Spanish flu of 1918-19, for clues about how the disaster would unfold. Now that the plague has abated, history may also provide a few lessons for the aftermath. As the first world war and the Spanish flu receded, interest rates were low and government spending high. Inflation surged. In order to bring prices back under control, America’s central bankers cranked rates up, triggering a severe recession. The Federal Reserve described its actions in 1921 as “painful but…unavoidable” following “an unprecedented orgy of extravagance”.