1997
1997, true to the trend throughout the 1990's, was a strong year. The last half of the year slowed some, but only after two quarters of amazing growth. 1997 posted the following annualized quarterly growth rates: 7.3% (q1), 7.9% (q2), 5.5% (q3), & 4.2(q4). The preceding and following years demonstrated strong growth as well. There were no business cycle turning points in 1997. An expansion was taking place, beginning in March of 1991 and did not peak until March of 2001.
Unemployment continued to fall during the year. It dropped below 5% for the first time in 25 years. The unemployment rate dipped as low as 4.7% and averaged 4.9% on the year. Inflation fell from 3.0% to 2.5%, and this downward trend continued into 1998. The decline in inflation was spurred by falling energy prices. The exchange value of the dollar also increased, and the federal funds rate was increased from 5-1/4% to 5-1/2% with very little market response.
M3 grew at a rate higher than that of GDP. As the velocity of M3 decreased, that of M2 began to come back into line with historical patterns. The velocity of M2 had been growing since the beginning of the decade.
1997 was a splendid year. The economy performed well, and I got married. You just can't beat a year like that.