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Is It 1937 Again?

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SUMMARY

When Americans look back at the first half of the 20th century, many pivotal years come to mind. 1937 is probably not one of them. We weren’t involved in a world war and the stock market did not suffer a monumental crash. From an economic perspective, however, there is much to learn from what happened in 1937, and those lessons play a role in forecasting where our economy could be headed.

In this report, we take a closer look at a year when market and economic events were similar to today. Looking at the events of 1937, we can compare actions and reactions. Much like 2016, the Federal Reserve's decisions in 1937 played a major role in the economy and taking these experiences into account may help investors prepare for what might occur over the next few years.

KEY TAKEAWAYS

  • There are parallels between the market and economic events in 1937 and 2016.
  • Today, similar to 1937, the U.S. economy has a major economic downturn in the rear-view mirror. At both times, the economic and employment pictures have been on the mend. There is a well-recognized need to put interest rates back on a path toward normality.
  • By studying the actions taken in 1937, and the results, economic decision-makers can attempt to avoid significant and sustained market corrections or other negative effects on the economy. Investors should watch actions closely, and keep history and the larger perspective in mind.

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